Salary sacrifice could help you drive a brand-new electric car through your employer with lower tax, lower running costs and less hassle.
If you have ever used salary sacrifice for either childcare vouchers or the Cycle to Work Scheme then an electric car salary sacrifice works in much the same way.
Your car undertakes a fully maintained and insured contract hire agreement - and you pay for it by exchanging your gross salary - thus saving income tax and national insurance on that portion of salary.
You make further savings from the company reclaiming 50% of the VAT on the finance rental ... 100% VAT on the service rental and whatever proportion of their Class 1 NIC savings they make on your reduced salary
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The service agreement includes all servicing, maintenance, MOT's and replacement tyres and the is vehicle fully comprehensively insurance for the whole agreement and you can add up to two extra drivers.
Because it is a benefit you will pay BIK tax - but for 2026-2027 this is just 4% for fully electric cars.
Higher rate tax payers save more than basic rate tax payers - the example in the image shows a breakdown of how the savings are calculated.
If you leave your employer permanently for any reason the agreement is terminated - protections are in place to safeguard against the usual early termination fees.
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Yes .... the quoted headline savings will generally refer to the tax rate of the individual.
However savings come from more than one place - including reduced income tax, reduced NI contributions, 50% of the vehicle finance VAT , 100% of the service rental VAT and whatever amount your company decides to contribute from their Class 1 NIC savings.
You will pay BIK tax as the vehicle is considered a benefit - but for 2026-2027 this is just 4% for fully electric cars.
Higher rate tax payers save more than basic rate tax payers - the example in the image shows a breakdown of how the savings are calculated.
Example based on a BYD SEAL SALOON 390kW Excellence AWD 83kWh 4dr Auto on a 36 month fully maintained and fully insured salary sacrifice agreement for a 40 year old male from CO3 postcode and 40% tax payer
Register for our demo offers portal to view further savings which would be based on your home post code, age and salary range -
Click on the banner at the top of the page and use the company ID stated to register.
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It does cost your employer anything to set-up, implement or operate a scheme - it is very simple and we take care of everything - including launch and in-life communications and support.
There are significant benefits to the business beyond cost considerations - there is much research and evidence highlighting the benefits such a scheme has on staff retention, employee engagement and attracting new talent to the business. Additionally because the scheme only promote electric vehicles it will enhance their ESG credentials and reduce Scope 3 emissions - both very significant if the business deals with the public sector or submits complex tender proposals.
If you share your company details we will engage with the necessary individuals and explain how the scheme works, the benefits to the business and the protections we provide ... and we'll get to work on saving you up to 40% on your next new electric car.
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