Salary Sacrifice - Employer

Electra has several benefits for your business, including:

1. Cost savings: Your business will be eligible for tax incentives, such as reduced National Insurance Contributions, for both you and your employees. The more employees who switch to Electra, the greater NIC savings for your business.
2. Sustainability: Low-emission motoring is good for your Corporate Sustainability credentials.
3. Attract and retain employees: Offering electric car salary sacrifice as an employee benefit can help your business attract and retain talented staff who are environmentally conscious and looking for eco-friendly perks. They can drive desirable cars at a lower monthly cost.

Electric car salary sacrifice is an employee benefit scheme that enables individuals to exchange a portion of their pre-tax salary for a fully electric vehicle for personal use. The employee and employer agree to a salary sacrifice arrangement, and the employer uses the sacrificed salary to lease the electric car on behalf of the employee for a fixed-term contract.

The employee is responsible for the upkeep of the car. As a result, the employee may benefit from reduced income tax and national insurance contributions, as the sacrificed salary is paid with pre-tax income.

Nowadays, electric cars are becoming increasingly accessible to employees of all incomes, thanks to the availability of salary sacrifice schemes. As long as the employee's participation in the scheme does not result in their gross pay falling below the National Minimum Wage level, any employee should be eligible to take advantage of this opportunity.

Nothing! Our salary sacrifice scheme at Fleetsauce will save you and your employees money! The scheme allows your employees to save money on income tax and national insurance, which in turn reduces your national insurance liability as their employer. It's a win-win.

All limited companies are eligible for Salary sacrifice! In addition, we conduct a credit check for your business to determine the number of vehicles that can be included in the scheme.

At Fleetsauce our salary sacrifice scheme covers you for the event of an employee leaving your business. We include protection for you to avoid large early termination costs that can occur when you end a contract early. We like to give our customers the choice of protection, and we always discuss this at the start of the process to make sure the business and the employee understand they are all fully protected.

We keep this simple for you, after our initial discovery and understand what the business wants from the scheme, we then deliver a full customised scheme for your employees - designed to your specific needs. Your employees would have a full understanding if what the scheme involves and all instructions ready to engage with their own dedicated salary sacrifice expert to help and advise on each step of the process.

All EVs and most PHEVs (cars which emit less than 76g/km of CO2) benefit from very low tax rates
currently. (Note tax and NIC savings are most attractive for fully electric cars with zero tailpipe emission).

Some employers can choose to restrict models/ cars chosen depending on how they wish to deal with practicalities of operating the scheme (e.g., soft top convertibles, or 2-seater cars).

The employee will receive a company car, including any optional extras or accessories they’ve chosen, for the contract term and mileage. The vehicle will be fully maintained and is fully insured (provided you have chosen to take the scheme insurance). There is an option to add a “provision” which can help the employer with any unforeseen costs. The employer may also choose to share some or all their NIC savings with the employee. A company can choose to include home installation of charging units within the sacrifice. From a tax perspective this is financially advantageous and is down to employer choice as to whether charging April 2024 installation is included within the scheme or not and then up to the employee to opt to include the charger or not (they may not have an appropriate home).

The employee will be liable for any unexpected costs arising during the contract or afterwards. For instance, motoring fines, insurance excesses (subject to the company fleet/ external insurance
provider policy), excess mileage charges on termination, albeit termination costs can be mitigated to some extent by Early Termination Protection should you adopt this cover. The communication,
including the scheme rules and employee FAQs, will outline that these costs are the employee’s liability and will be met from the employee’s net play. Further details of what is not included in the insurance will be found in the agreement with the insurer.

The employer saving is based on the NIC rate, which is currently 13.8% (for the tax year 2024/25), multiplied by the amount of salary sacrificed. This could typically be around £1,000 or more per year
and will depend on the car chosen by the employee. It is down to the employer to decide whether to keep this saving or share it with the employee (which will reduce the required sacrifice thereby making
the new car even more affordable)

As the car is a company car, the employee is subject to income tax on the benefit and the employer has to pay Class 1A NIC on the benefit in kind. If either the tax rate or the NIC rate changes then this April 2024
would impact the cost to the employee or the company for any new vehicles ordered. The employee and company will know this as the system is kept up to date from a tax/NIC perspective.
For any vehicles already leased, if income tax increases, then this will be an additional cost to the employee, whereas if the employer’s NIC increases then the additional cost would be met by the
employer. Since the BiK on cars is low and has been confirmed to stay low until 2028, any increases in tax/NIC would be expected to be minimal.

As the car is a company car, it will remain in the business until the contract ends. If as an employer you choose to terminate the contract early, this will likely result in an Early Termination fee. This fee
can be paid by you, by the employee (under decided conditions which would be outlined in the Scheme rules) or alternatively it can be covered to some extent by Early Termination Protection (“ETP”). If ETP is added it will increase the employee’s cost of the salary sacrifice and there are limitations to cover (e.g., no cover for the first few months). This is covered in detail in the scheme rules document. Alternatively, the car could be reallocated to another employee under a salary sacrifice, or as a normal company car if the employer wishes, for example for new joiners.

As the company cannot reduce an employee’s salary below National Minimum Wage, they need to ensure they have a policy for what happens on SMP, SPP and SSP. Generally, it is recommended that
an employer follows their policy under other benefits (e.g., provision of lifestyle events, allowing the benefit to continue, or the employee to take a ‘payment holiday’ until they return).

The car will undergo a damage and condition assessment when it is returned. The employee is allowed “fair wear and tear” as defined by BVRLA guidelines. These guidelines are very comprehensive in terms
of the damage allowed (size, location, dents/ dinks etc). Any damage that falls outside of this scope will result in an additional charge and this will be recharged to the employee upon the employer’s discretion.