6 Key Questions Businesses Ask About Electrc Vehicle Salary Sacrifice – Gofor’s Guide
Are you considering offering an electric vehicle salary sacrifice scheme to your employees, but still have some doubts? You are not alone. Luckily, we have pulled together some of the most frequently asked questions from businesses looking to introduce EV salary sacrifice schemes. This clear, no-nonsense article will help you better understand this employer benefit and make a more informed decision.
Here is everything you need to know:
1. Who can participate in an EV salary sacrifice scheme?
Most businesses can participate in an EV salary sacrifice scheme. From start-ups to large corporations, if your employees are on a PAYE payroll, you are eligible to join. No strict employee number requirements make this an accessible benefit for all kinds of businesses.
2. What advantages does an EV salary sacrifice scheme offer businesses?
The obvious answer is that EV Salary Sacrifice gives employees an affordable way to drive a new electric vehicle. It is a fantastic way to help you attract and retain top talent.
By adopting EV Salary Sacrifice, you can also improve your environmental credentials and demonstrate your commitment to sustainability. Additionally, businesses benefit from reduced National Insurance Contributions, adding to the overall financial advantages.
3. How does tax work for businesses with an EV salary sacrifice scheme?
Businesses must report the value of the benefits to HMRC using the P11D form at the end of the tax year. This helps HMRC determine the total benefits your employees receive. Additionally, the P11D(b) form calculates the Class 1A National Insurance Contributions your business owes on these benefits, including the electric vehicles.
Here is the good news… EVs typically have much lower Benefit-in-Kind (BiK) tax rates than traditional petrol or diesel cars. This means businesses and employees enjoy significant tax savings, making electric vehicles cost-effective.
4. Does my business need to undergo a credit check to participate?
In short, yes. We require a credit check to ensure your business can financially support the lease agreements. Since these agreements typically span two to five years, providers must ensure that they can meet the ongoing financial commitments, even though the payments are deducted from employees’ salaries.
5. What happens if an employee leaves or takes extended leave?
We get this question all the time, and it is an important one. With Gofor, we have designed our scheme with flexibility in mind. If an employee resigns, is let go for gross misconduct, or takes a long-term leave (e.g., parental, or sick leave), we offer several options to minimize disruption.
Employees may be able to keep their vehicle, or the lease can be terminated without incurring hefty penalties, reassuring businesses, and avoiding unexpected financial burdens. Our straightforward and personal process ensures that you and your employees are supported throughout the contract.
6. Why is salary sacrifice more affordable than a personal lease?
The primary reason is that tax efficiency is built into salary sacrifice. Lease payments are deducted from an employee’s gross salary before tax, which means they pay less tax and National Insurance Contributions. This leads to substantial savings on monthly payments.
Additionally, Gofor’s business partnerships allow for bulk leasing rates that are more competitive than personal lease agreements. These collective deals help secure a better overall rate for businesses and employees, making it a more affordable and tax-efficient choice.
Still have questions?
If you would like to find out more about how an EV salary sacrifice scheme can work for your business, our expert team are here to help.
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