Electric Car Salary Sacrifice: Explained The Easy Way

Thinking about getting an electric car but worried about the cost? There’s a clever way to get one without feeling the pinch in your wallet, and it’s called an EV salary sacrifice scheme. Let’s break it down into super simple terms, using an example to make it as easy as pie.

What’s This Scheme All About?

Imagine you want a shiny new electric car, but the price tag looks scary. There’s a trick to make it cheaper—by ‘sacrificing’ a small part of your salary before it gets taxed. It’s like telling your employer, “Hey, take a bit of my pay before the taxman does, and use it to lease an electric car for me.” Because this chunk of your salary doesn’t get taxed, you save money.

How It Works – Super Simple Example

Let’s say you earn £3,000 a month. You spot a cool electric car you can get through your work’s salary sacrifice scheme. It costs £300 a month to lease it.

Without the scheme: You get your £3,000, pay taxes (let’s say £1,000 for easy math), and take home £2,000. If you then lease the car on your own, you’re left with £1,700.

With the scheme: You first take out the £300 for the car, leaving you with £2,700. You then pay taxes on this lower amount (let’s say £900 now, because you’re earning ‘less’). So, after taxes, you take home £1,800, plus you have the car.

You end up with more money in your pocket at the end of the month AND a new electric car to drive.

What Do You Get?

In this deal, not only do you get to drive around in a new electric car, but the scheme usually also covers insurance, breakdown cover, and all the servicing the car needs. You just need to pay for the electricity to charge your car. It’s a lot like having a Netflix subscription; you pay a monthly fee and get to enjoy all the movies without worrying about extra costs.

Sounds Too Good to Be True, Right?

You might wonder, “What’s the catch?” Well, there’s a tiny one. The government sees the car as a ‘benefit’ you’re getting, so there’s a small tax on it. But because it’s an electric car, this tax is really low. You still end up saving a lot compared to buying or leasing a car on your own.
Here’s the important bit: for this magic to work, your employer needs to set up and run the salary sacrifice scheme. Not all employers offer this, so the first step is to have a chat with your boss or HR department. They need to agree to lease the car and deduct the costs from your pre-tax salary. If your employer’s on board, you’re golden.

As electric vehicles (EVs) continue to gain popularity, various services have emerged to simplify the process of acquiring an EV through salary sacrifice schemes. These services not only make it easier for employers to offer such programs but also provide significant benefits to employees looking to switch to electric.

Here’s a rundown of some key players in the market:
1. Tusker
2. The electric car scheme
3. Elmo
4. Fleet Alliance
5. Fleet Electric
6. Loveelectric
7. Octopus EV
8. Pink Car leasing

Let’s Wrap It Up

So, is getting an electric car through a salary sacrifice scheme a good deal? Absolutely. It’s like getting a premium Spotify account for the price of a regular one. You enjoy the music (or the car, in this case) and save money because of the tax tricks.

Remember, though, talk to your employer about how the scheme works for you. And just like that, you’re on your way to driving a new electric car, saving money, and doing your bit for the planet. Easy!

Stay tuned to Askaprice.com for more insightful articles on car finance, electric vehicles, and how to navigate the changing automotive landscape. Our platform is dedicated to providing you with the latest trends, advice, and information to make informed decisions about car ownership and financing.

Disclaimer: This is a simplified example to help you understand the concept. For personal advice, please talk to a professional.