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  • May 21, 2021

  • 10 min read

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Why Should I Sign up to a Salary Sacrifice Scheme Now?

Each year, we see a plethora of new electric vehicles coming to the market. For 2021, it’s predicted that 15% of the new cars sold in the EU are going to be electric and, in the UK, EV registrations are expected to grow by over 50%! These forecasts, along with over 20 new electric models set to be released in the second half of this year suggest that 2021 is truly the year of the EV!


Taking advantage of the amazing current company car tax benefits


A little known change to Benefit in Kind (BiK - explained below) in 2019 made EV’s more affordable for those salaried through a business (either a company car or a salary sacrifice car). To access these savings, Octopus Electric Vehicles have created a free-to-implement 100% Electric Salary Sacrifice Scheme, called Electric Dreams, enabling employers to offer their employees a cost-effective and planet friendly benefit to make the amazing switch to electric (essentially accessing a lease through your employer and paying for the car through salary sacrifice - a bit like the cycle to work scheme)!


BiK is a tax applied to benefits that employees receive on top of their salary, and in the context of cars, is dictated by the amount of tailpipe emissions that a vehicle produces. For company cars, and EVs specifically, this is currently only 1% until April 2022 (and 2% until 2025), whereas for petrol and diesel vehicles this is often 20% or more. Even though it will be used as a personal car, it is still leased to the business and therefore a company car - but the associated tax is negligible for EVs!


Ok, so BiK is currently really low for EVs, but how does that actually save someone money?


The major savings through salary sacrifice come about thanks to the employee paying for their car through their gross salary, meaning that they save money on national insurance and income tax (up to 60%!). With BiK so low for EVs, the vast majority of these savings are maintained even after BiK has been applied, whereas for a petrol or diesel car these savings are reduced.


To add to this, as part of Electric Dreams, the monthly sacrifice doesn’t just include the vehicle, but fully comprehensive motor insurance, servicing, maintenance and repair, as well as breakdown and recovery services, meaning that those savings are made on all of those items too. It’s worth knowing that EVs are usually much cheaper to maintain compared to petrol and diesel vehicles (on average 49%!) so, combined with low BiK, EVs really can save you a lot of money!


Other benefits of switching to electric


Again, thanks to producing zero tailpipe emissions, EVs save costs elsewhere - for the planet and your pocket. In the Ultra Low Emission Zone (ULEZ) in London, for example, non-compliant vehicles have to pay a daily fee for entering - but EVs pay nothing once registered. ULEZ is set to expand in October 2021, meaning that more polluting journeys are going to be penalised, impacting more drivers. For those outside of London, low emission zones are also being implemented. Back in March, Bath introduced a new zone and, in June this year, Birmingham will be introducing a zone that will operate in a very similar way to ULEZ, penalising private cars that don’t meet the emission standards.


Powering your vehicle is another area where EVs can save you incredible amounts of money. Compared to fuelling up a normal petrol or diesel vehicle, an EV can save you up to 90% vs fuel (if charging at home on our EV tariff Octopus Go)! We have a cost calculator at the bottom of our ‘Cars’ page, which you can use to estimate your annual fuel savings if you switch to electric. To make things nice and simple, Electric Dreams will also offer you the full EV charging solution - and employees who submit an order by 30th June will be eligible for a free smart charger!* On top of this, if an employee switches to the Octopus Go tariff, they can get 8,000 free miles worth of electricity.**


Thanks to extremely low BiK rates, cheap charging & fuel, and considerable savings on national insurance and income tax contributions by paying for the vehicle through salary sacrifice, launching one of these schemes as a benefit to your employees is a no brainer.


If you would like to find out more about how to pick the perfect EV to fit your lifestyle through salary sacrifice, you can join one of our free online workshops. Alternatively, you can book a call with one of our Electric Vehicle Specialists, who will be able to answer your questions about making the exciting switch to electric. Additional information can also be found and downloaded on our Salary Sacrifice page.


*Includes home charger and standard install, based on the driver being eligible for the OZEV grant. Terms & Conditions Apply


**Requires home electricity to be powered by the Octopus Go tariff; Free miles based on off-peak charging

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