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Three in four employees interested in EV salary sacrifice

Charging an electric car on the street

Employers can choose to offer a wide range of workplace benefits, ranging from pension schemes and income protection to private health insurance, gym membership and Employee Assistance Programmes (EAPs).

Employees particularly appreciate cash-saving benefits such as salary sacrifice schemes, but are not always comfortable enough to ask for them, according to new research by YouGov for Octopus Electric Vehicles.

When asked to choose the most important factor of an employee benefit, respondents selected the ability to save money (73%) as their top priority. This was followed by benefits focused on mental and physical wellbeing (42% and 39%).

However, despite employee preferences towards saving cash, according to HR professionals fewer than one in five (18%) UK firms offer salary sacrifice for electric vehicles (EVs) -- an employee benefit that could directly save staff at least £1,200 each year.

Salary sacrifice is an arrangement in which an employee can 'sacrifice' a portion of their salary, before National Insurance and income tax, to put towards a brand new vehicle of their choice, making it a more cost-effective way of financing a car. Salary sacrifice for EVs can help workers save 30-40% on the monthly cost of a new electric car.

In the Octopus research, once employees fully understood the benefits of salary sacrifice (fully maintained EV, insurance, charger and thousands of free miles) three quarters (74%) said they would like the scheme to be offered at their workplace.

There is some reticence over actually requesting such a perk, however. Only half of the employees who took part in the survey said they felt comfortable asking their boss for additional benefits. And 54% don't recall ever being asked for feedback on their benefits package.

Commenting on the research, Fiona Howarth, chief executive of Octopus Electric Vehicles, said: "It's a really difficult time for many households, so it's no surprise that people are prioritising financial support from their employer. An EV salary sacrifice scheme can save employees thousands of pounds on their car costs, making an electric car a possibility for many that couldn't afford to buy one."

Howarth added that for employers, it is "super easy and zero cost" to set up EV salary sacrifice, and as well as helping staff to save cash it can also save the business money.

Separate research by Fleet Evolution has revealed that many HR professionals are not aware of salary sacrifice schemes for electric cars.

In a survey conducted at this year's Chartered Institute of Personnel and Development (CIPD) Exhibition, the vehicle leasing company found that only 15% of HR decision-makers had any knowledge of salary sacrifice schemes for EVs and their benefits for employees. This figure was unchanged from a similar survey carried out a year ago.

"We found the results astonishing, given all the publicity surrounding salary sacrifice schemes, particularly for EVs where the low levels of benefit-in-kind (BIK) tax make them particularly attractive," said Andrew Leech, founder and managing director of Fleet Evolution.

Chancellor Jeremy Hunt confirmed in the Autumn Statement that BIK rates for EVs would go up by just 1% a year for three years from 2025/26, giving a rate of 5% by 2027/28.

"The Chancellor gave us clarity on the Government's position for the next five years at least, which is that they are committed to a low tax environment for EVs," Leech said.

"This is great news for employees and employers alike, given the multiple benefits such a scheme can deliver -- especially during the current cost of living crisis which has seen inflation hit 11%."

Leech added: "For businesses and staff that want to keep mobility costs under control at a time of rapidly spiralling costs, a salary sacrifice car scheme can provide even relatively low paid staff with a highly cost- and tax-efficient electric vehicle.

"Such a scheme can also help employees tackle the anxiety and emotional stress caused by the prospect of living costs spiralling out of control and help contribute positively to their wellbeing in the current turbulent economic climate."

Posted by Fidelius on December 13th 2022

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