SALARY SACRIFICE BY ELECTRIC ZOO
Bolster your CSR credentials, employee retention and recruitment with a unique benefit giving the team access to new electric cars for lower costs than running ice (internal combustion engine) cars. Together we can turn ICE to NICE! (No Internal Combustion Engine) … All at no cost to you!
The benefit and motoring landscapes are evolving. Just 50 years ago, employees were enjoying the first company cars, a four-star fuel-powered perk that few were entitled to. Those that were eligible valued the hassle-free service the perk offered almost as much as the car itself.
50 years on, diesel is dying, petrol has had its last rights read and now on death row, add to the mix the demands of society, good employees are hard to find and maintain, they demand a considerate employer who will cater to their needs. These needs are no longer limited to a regular salary. Employees want to work for an employer who puts their mental and financial wellbeing high on the priority list along with the environment, meaning those dirty diesel and air polluting petrol cars are being replaced by electric vehicles.
The great news is that the government is equally committed to protecting the environment. They have sanctioned a whole raft of initiatives from solar panels to wind turbines and more recently electric cars to be included within salary sacrifice, and introducing an extremely favourable tax treatment to promote electric cars to your employee base. However, there are some limitations. All of your employees need access to reliable vehicles, whether funded by them or you, but what scheme can you offer to give them the maximum benefit? Let us at Electric Zoo walk you through the various schemes along with the pros and cons of each, so you can consider how to help your employees best.
Our specialist team are here to assist and advise employers and employees on how the salary scheme can best work for them and cars that are most suited to individual needs.
Salary sacrifice is a benefit on the rise. In essence, salary sacrifice allows employees to flex their package to substitute their salary for another benefit. In the case of cars, employees give up salary in exchange for a fully-funded car with the option of everything covered (except electricity) within the monthly payment. By coupling salary sacrifice with electric cars, employees can save up to 45% compared to retail, making electric car motoring better value than running a 5-year-old diesel or petrol car!
Salary sacrifice cars have always been a taxable benefit and the benefit charge can reduce savings. However, the government are heavily backing the scheme, from April 2020 electric cars will have no company car tax at all! With a tax of just 1% in 2021 and 2% in 2022. The main tick boxes you’ll address with salary sacrifice are the environmental concerns and the mental and financial wellbeing of your team. We manage everything for you and for them! Thus allowing you to increase productivity and overall satisfaction of your employees at no cost nor risk to employers within our scheme rules!
The employee can thrive with savings of up to 45% compared to retail. They can get behind the wheel of a new electric car for the cost of running a 4-6 year old ICE equivalent. Electric cars demonstrate the biggest savings, not to mention over £100 a month in fuel savings compared to cost of home charging for electric cars.
Staff generally have enough demands on their time. So that’s why we manage all their motoring needs, leaving them free to focus on the important things, whether that’s at work or at home!
Driving an electric car is less stressful compared to a Diesel or Petrol car as the reduction of noise levels due to there being no engine noise can be a welcome relief. All electric cars have automatic transmissions thus reducing the constant need to have clutch control and change gears in busy traffic situations. Electric cars have fewer moving parts compared to ICE cars, therefore requiring less down time for maintenance and relieving time pressure.
With Electric Zoo, you can Go Electric The Easy Way. Electric cars are cheaper than running a diesel or petrol car! We can use our Smart Box Technology to analyse the usage of your current ICE car to find your ideal electric car replacement with demonstrated savings in money and carbon dioxide (CO2). By going electric, not only are savings maximised, but you’re also future-proofing by complying with rules on Clean Air Zones as all electric cars are zero emission.
Salary sacrifice cars cost nothing to you and have very little leavers risk; we only require a one month notice to cancel, should an employee leave. Salary Sacrifice can boost your CSR, differentiate you as an employer who cares for your employees, cares for the environment to help drive up employee engagement.
If you have employees who need to drive on company business for a significant amount of time, it’s usual for you to fund or part-fund the car for them. However, by doing so the employee will incur company car tax. This tax can be very punitive with some cars, almost the same as a personal lease would cost, but of course without the level of choice. With essential users you have a few options, which will be largely driven by their work demands. This is where we can assist you To Go Electric The Easy Way through Salary Sacrifice and take advantage of ZERO company car tax for 2020, 1% for 2021 and only 2% for 2022 financial years.
Since 2003, when the government changed benefit in kind rules, perk cars have been steadily growing in popularity. Sometimes funded by the employer, sometimes by the employee and sometimes a combination. Salary sacrifice cars started gaining popularity from 2007. Despite changes to other salary sacrifice benefits in 2017, they’re an increasingly popular benefit, especially for electric cars (which were excluded from changes to benefit in kind). Therefore, it’s surprising that so few employers know about salary sacrifice cars. It is estimated only 6% of employers are aware of the scheme? Recent surveys suggest that employees prioritise the environment and their mental and financial wellbeing, which is precisely where this scheme can help!
The main issue with employee car schemes is the CO2 of the car. Recent times have seen the way taxation for cars has increased, especially for diesel over petrol. Additionally, there was a new, fairer testing regime introduced in 2018 to measure emissions, WLTP (World Light Testing Procedure) This had a minimal effect on many manufacturers, but it severely impacted the stated CO2 of cars, including Land Rover and VW. However, there is good news on the horizon.
The government have always used the tax and benefits system to prioritise what they feel is important. They back salary sacrifice pensions as they reduce the burden on the state. They back cycle to work schemes as it will reduce dependence on the NHS by making people more active. In 2019, they turned their attention to electric cars and schemes to promote their uptake. They have announced changes which will further advance the protection they gave such schemes in the 2017 salary sacrifice review.
From April 2020, electric cars will have no company car tax, with negligible company car tax in 2021 and 2022. They have also thrown massive funding behind research and development and charging infrastructure. This ensures the UK will be at the front of a fast-growing market, which has signalled our readiness to manufacturers clamouring to release innovative products. Today, anyone with a drive, garage, or workplace charge points can have an electric car that will cover nearly a weeks worth of journeys on a single charge. With salary sacrifice, this can be done for a lower cost than running an old, polluting ICE vehicle.
Of course, the government and manufacturers have reasons to promote clean air. Penalties for failing to meet pollution targets are huge, for cities and countries. Manufacturers face similar penalties promoting the surge to introduce electric vehicles. With renewables providing all of our electricity on numerous days throughout 2019 and increasing this year electric cars really are green and clean as they have zero emissions. Your employees are craving electric cars, and employers who cater to this demand will be the winners in the competitive recruitment and retention marketplace.
The introduction of our scheme is incredibly simple. You may be wondering, where do I come into this? Well, here’s our super-simple two-step setup we need you to follow so we can get your scheme up and running!
*Statutory Maternity Pay
We will provide your full team with a slide presentation on How to Go Electric The Easy Way with full Q & A
We offer employee guidance and expert advice to find the best electric car for their requirements using our Smart Tech EV Studies which will be available when your scheme has been set up.
We’ll also handle launches and any queries, questions or anything else your team wants to know.
We try to keep our scheme as simple as possible, after all, your skillset is your company. We do need to involve you in some key areas though, once your scheme is set up, on a monthly basis you will need to:
APPROVE ORDERS, CHECK EMPLOYEES ARE PERMANENT AND HAVE SUFFICIENT SALARY
CALCULATE AND ADVISE PAYROLL OF SALARY SACRIFICE DEDUCTIONS
MONTHLY PAYMENTS MADE THE SAME MONTH AS THE DEDUCTIONS
ADVISE OF LEAVERS PROMPTLY