5 most asked questions businesses have about EV salary sacrifice

Thinking about joining an EV salary sacrifice scheme but have a few questions? You’re not alone. We’ve compiled the top questions businesses ask, with straightforward answers to help you make the best decision for your team.

So, without further ado, let’s answer:

1. Is my business eligible for an EV salary sacrifice scheme?
2. What are the business benefits of joining an EV salary sacrifice scheme?
3. How does business tax work with EV salary sacrifice schemes?
4. Will my business need to pass a credit check to join an EV salary sacrifice scheme?
5. What happens if an employee leaves or goes on extended leave during an EV salary sacrifice scheme?

In short, yes - most businesses are eligible for an EV salary sacrifice scheme. If you have employees on a PAYE payroll who earn above the minimum wage after deductions, you’re all set. There’s no minimum employee requirement, so whether you’re a small startup, large enterprise, charity, partnership, or even Government employer, salary sacrifice is open to you.

An EV salary sacrifice scheme offers many business benefits. Not only do you get to boost employee satisfaction by offering them a cost-effective way to drive a brand-new electric vehicle, but you also help your business stand out as environmentally conscious.

This scheme is an easy way to support your corporate social responsibility goals, improve recruitment and retention, and reduce your business’s carbon footprint - all while saving on National Insurance Contributions.

You can read more about benefits in our blog: four ways an EV salary sacrifice scheme can benefit your business.

At the end of the tax year, you’ll need to submit a P11D form to HMRC for each employee who has an EV through salary sacrifice. This form details any benefits they received. You’ll also submit a P11D(b) form if you’ve submitted any P11Ds or paid employee expenses through your payroll.

The P11D(b) is used to calculate how much Class 1A National Insurance you need to pay on the benefits provided, including the electric vehicles leased through the salary sacrifice scheme. The good news? EVs are subject to significantly lower Benefit-in-Kind (BiK) rates than petrol or diesel vehicles, meaning the savings extend to both you and your employees.

Yes, most schemes will require your business to pass a credit check. This is because entering an EV salary sacrifice scheme means committing to lease agreements that typically last two to five years. While the lease costs are offset by your employee's salaries, the provider still needs to ensure your business is financially stable enough to cover those costs in the long term.

In addition to a standard credit check, you may be able to provide extra information to demonstrate your business's financial health. This can help give a more accurate picture if the data available from credit reference agencies or Companies House is outdated or incomplete.

Some schemes offer protections in case an employee leaves or takes extended leave. For example, our EV salary sacrifice scheme includes robust and easy-to-use protections as standard. These allow the lease to be ended without penalty in certain situations (such as resignation or redundancy) or offer additional support in events such as parental leave or long-term sick where the employee can keep use of their car even when on statutory pay.

This means your business isn’t left with unexpected costs, giving you peace of mind when offering this benefit to your team.

Got more questions? Head over to our Ultimate Guide to Electric Car Salary Sacrifice for Businesses.