Calculate Salary Sacrifice Savings for An Electric Car
There are many salary sacrifice car calculators, but you usually have to sign up to access a scheme, committing yourself before you see guaranteed costs. There are also times when you may not need a third-party supplier to manage this for you and simply want to package a senior managers proposed lease car into a salary sacrifice arrangement. So, how do you calculate salary sacrifice for electric cars?
The first thing to be aware of is salary sacrifice cars are essentially business contract hire cars packaged into an HMRC compliant scheme. At the core is a traditional company car offered for a set period, after which it goes back to the supplier. As such, the cost calculation is fairly simple; work out the cost to the company and pass this on to the colleague.
The Cost to you is 4 Elements
The car must be a business contract hire and will have a ‘finance’ cost and a ‘services’ cost. The ‘finance’ is the depreciation, road fund licence, etc. The ‘services’ is the maintenance, tyres, and management. There will also be VAT charged, but if you are VAT registered, you can normally claim all the VAT back on services and half VAT back on finance; strange, I know, but a longstanding VAT principle. This gives you the ‘effective’ rental.
There is Another Cost Some Forget, National Insurance.
The employer will pay NI on the benefit of a car, a few pounds if it’s electric, and this needs to be charged to the employee. You will also save National Insurance on the gross payroll deduction, which you can factor back into the employee cost if you wish.
All Of This Means the Employee Can Make Some Savings
Savings in addition to their NI and tax, achieved by deducting from gross pay, such as the recoverable VAT and any factored back employers NIC saving. However, if you are offering a benefit like this outside of equity holding directors, you probably want to partner with an expert. Costs will rise slightly but that way, you can cover off leaver risk and outsource your admin, plus the colleague will still get a significantly cheaper deal than retail, so both parties win!
We’re Very Transparent About Costings at Fleet Evolution
If you would like a login to our live quotation engine, just email us at engagement@fleetevolution.com! Make sure it’s from your work email as we have lots to shout about with salary sacrifice cars, but we don’t want other suppliers seeing what we do so well!
Tags : calculate salary sacrifice, electric car, Salary Sacrifice