Salary Sacrifice Cost of Living: EVs Can Help Staff Tackle Cost of Living Crisis?
As prices at Britain’s forecourts hit £2 per litre for petrol and diesel for the first time in history and the cost of living crisis gets ever deeper, there has never been a better time to consider switching staff into an electric car provided under a salary sacrifice scheme.
So says Andrew Leech, MD and founder of EV salary sacrifice and fleet management specialist, Fleet Evolution, who argues that for businesses and staff that want to keep mobility costs under control at a time of rapidly spiralling costs, a salary sacrifice car scheme can provide even relatively low paid staff with a far more cost and tax-efficient vehicle.
What about the costs?
“There is a misconception that salary sacrifice car schemes are for the more highly paid employees who are paying tax at 40%, but in reality, the ones they really benefit are ones at the lower end of the pay scale paying tax at 20%, as you cannot allow a salary sacrifice to take net pay below the minimum living wage,” says Leech.
To demonstrate how the running costs of a salary sacrifice electric car compare with those of a conventional ICE engine model, Leech cited figures from the Government car cost calculator website, such as Money Helper. These show that for an average family-sized car, like a five-year-old Vauxhall Astra 1.4T 16v 150bp SRi 5dr, the total annual running cost over a typical 10,000 miles is £8,070 a year or around £675 a month, including depreciation, fuel, SMR and insurance.
| Make and model | Vauxhall Astra 1.4T 16v 150 SRI 5dr |
| Mileage per annum | 10,000 |
| Total annual running cost | £8,070 |
| Annual fuel cost | £,1483 |
| SMR costs | £1,077 |
| Car tax | £135 |
| Annual insurance cost | £600 |
| Fuel consumption | 51.4mpg |
| Estimated car value | £9,850 |
| Estimated depreciation cost | £4,775 |
This vehicle would probably not have business use but would largely be used for commuting and social, domestic and pleasure purposes.
Salary sacrifice lease rental includes servicing, maintenance and repair, road fund licence and insurance costs
“However, by having a comparable electric car under a company-provided salary sacrifice scheme, such as a VW ID3 Life Pro, a typical 20% tax payer would incur a lease rental cost of £322 per month to travel the same 10,000 miles, with recharging at home typically costing around £50 a month – that’s around half of what they’d pay in running their own car,” said Leech.
This monthly salary sacrifice lease rental would include all servicing, maintenance and repair, road fund licence and insurance costs, making it far most cost-efficient for lower-paid employees.
“For staff in lower pay brackets, this saves a significant proportion of their monthly take-home salary at a time when living costs are coming under unprecedented pressure. At the same time, they will also be making a major contribution to reducing their company’s carbon footprint. For employers, from an ethical viewpoint, going down an EV salary sacrifice route shows them in a positive light in trying to help their employees manage their living costs at a time of price rises across the board and in just about every area of society,” he said.
The Tamworth-based business, which is in the midst of a record year in terms of EV orders, can provide carbon output reporting for clients to show the impact of switching to EVs away from ICE models and the level of CO2 emissions they will be cutting by making such a move.
“This shows not only the environmental impact of running EVs instead of ICE models, but the annual savings in CO2 emissions that fit in with any CSR policy,” added Andrew Leech.
Frequently Asked Questions
What happens if an employee leaves?
If an employee leaves then you do not have to continue with payments for the car. However, we will offer the car to the employee under a more standard lease option or to outwardly pay for the vehicle. So, as an employee, you can always have the option of car ownership regardless of if you stay with the company in question or not. Hence, it is a good system to buy a brand new vehicle even if you are worried about the company commitment.
What cars are available on salary sacrifice?
Through Salary Sacrifice you can find a lot of brand new cars for amazing prices. However, you gain the most when choosing ultra low emission vehicles. Providing salary sacrifice schemes for a company car has many benefits, but the option of having new electric vehicles is by far the most impressive.
Tags : cost of living, electric, electric car, electric vehicle, EV, Salary Sacrifice