The lease contract and all associated services will be in the name of your employer and not yourself. Therefore, all costs are payable and contracted to the employer. The use of the car is then provided to you in exchange for the amount of salary sacrificed. As this is then deemed a benefit in kind (BIK), you will be required to pay company car tax. The rules on electric vehicle company car tax that run until March 2025 mean that the amount in company car tax you’ll pay is very low, and makes salary sacrifice a very cost-effective way of running an electric vehicle.
Are you interested in driving a brand-new electric vehicle while enjoying substantial financial savings? Our salary sacrifice scheme empowers employees like you to lease an EV through a hassle-free process in conjunction with your employer.
Opting for salary sacrifice for electric vehicles presents an exceptionally cost-effective avenue for accessing a brand-new electric car. Discover the advantages and find out how you can participate in our EV salary sacrifice scheme.
What is Salary Sacrifice to an Employee?
A salary sacrifice arrangement is an agreement between you and your employer to reduce your entitlement to cash pay in return for a non-cash benefit, such as a vehicle. Under the Wessex Fleet salary sacrifice scheme, you will receive a fully insured and maintained leased electric vehicle in return for giving up a portion of your monthly pay which is equal to the cost of the lease and associated services.
By varying the terms and conditions of employment, you will receive a lower salary but will save on income tax and national insurance contributions. This will mean that the difference in take-home pay will be significantly less than the original amount of salary sacrificed.
Your employer will need to change the terms of your employment contract in order to set up a salary sacrifice agreement if you do not have an existing one. However, before they can make any changes to your employment contract, you will need to agree to them.
Salary sacrifice arrangements are not allowed to reduce your cash earnings below the National Minimum Wage (NMW) rates, so your employer will put in place procedures to cap the deduction to ensure NMW rates are met.
Salary Sacrifice Employee Benefits
There are a wide range of benefits that come with leasing an electric car as part of your company’s salary sacrifice scheme, which include:
- Always have a new car: You’ll have access to a new car every two to four years, usually at a lower cost than other methods of new vehicle provision.
- No deposit or credit check: Typically, there will be no deposit or credit checks for you and no impact on your personal credit.
- Tax and NIC savings: Tax and National Insurance liabilities are reduced as payments are deducted from gross salary resulting in significant savings.
- Everything in one deal: All-inclusive, hassle-free motoring at a fixed monthly cost. This includes servicing and maintenance, breakdown and recovery, road fund licence, fully comprehensive insurance, replacement tyres, and accident management.
- Additional vehicles: Access to a tax-efficient second or third car.
- Simplified budgeting: Salary Sacrifice can assist you in managing your finances more effectively. By deducting a fixed amount from your salary each month to cover a particular benefit, you can create a predictable budget. This simplifies financial planning and ensures regular contributions towards the chosen benefit.
What is included in an EV Salary Sacrifice scheme with Wessex Fleet?
Vehicles sourced via the Wessex Fleet Salary Sacrifice scheme will include all of the following:
- A fully electric vehicle leased on a term between two and four years
- Fully comprehensive insurance including business use
- Accident management
- Full maintenance package including all servicing, tyres, MOTs Breakdown cover
- Long-term sickness/accidental death protection
- A dedicated account contact
Why choose Wessex Fleet?
Wessex Fleet is a leading provider of electric vehicle salary sacrifice deals, specialising in the administration and management of employee benefits. Here's why you should choose us for your employee salary sacrifice agreement:
- Wide vehicle selection: Wessex Fleet offers a diverse range of electric vehicle options from all of the top manufacturers. This allows you as an employee to choose from a wide selection of models that suit your preferences and requirements. Whether you are looking for a compact city car or a spacious SUV, Wessex Fleet aims to cater to different needs.
- Competitive pricing: We strive to provide competitive pricing for our salary sacrifice schemes. This means that employees can enjoy the benefits of a brand-new electric vehicle at an affordable cost, potentially saving money compared to traditional car ownership or leasing options.
- Expertise and experience: With years of experience in the fleet management industry, Wessex Fleet has developed a strong understanding of the electric vehicle market. Our expertise allows us to guide employees like yourself through the process, providing valuable advice and assistance in selecting the right vehicle and managing the salary sacrifice scheme effectively.
- Seamless administration: Wessex Fleet aims to make the administration process as smooth as possible for both employers and employees. We handle the administrative tasks related to the salary sacrifice scheme, including vehicle sourcing, financing, and ongoing support. This relieves the burden on your employer and ensures a hassle-free experience for you as an employee.
- Environmental focus: As electric vehicles contribute to reducing carbon emissions and promoting sustainable transportation, choosing Wessex Fleet for a salary sacrifice scheme helps support eco-friendly initiatives. Transitioning to electric vehicles can have a positive impact on the environment and create a sense of pride for you.
Employee EV Salary Sacrifice FAQs
Whose Name is the Lease in?
How Does Insurance Work for an Employee?
Under this arrangement, insurance coverage is incorporated within the salary sacrifice package. Our collaboration with Lloyd Latchford, the foremost provider of salary sacrifice insurance in the UK, ensures that employees receive a personalised policy designed to suit their specific circumstances. Although the policy is held in your employer's name, it is customised to meet the individual needs of you as the employee.
What Does the Insurance Cover?
The insurance premium remains a fixed price throughout the duration of the agreement and provides comprehensive coverage, including:
- Social, domestic, pleasure, and commuting use, including business use related to the employer's activities, as a standard feature. Other types of business use for the policyholder and/or spouse/civil partner may be considered on a case-by-case basis, but it is crucial to check before making any car-related decisions. Additional drivers listed on the insurance (excluding partners/spouses) will only be covered for social, domestic, and pleasure use
- Unlimited coverage for permanently fixed audio and navigation equipment in the vehicle, without an independent power source
- Coverage for personal belongings in the car, up to £350
- Replacement locks
- Protection against vehicle damage resulting from incorrect fuelling (excluding coverage for the removal of incorrect fuel and refuelling of the car)
- Coverage for emergency medical treatment
- Reimbursement of medical expenses, up to £350 per person
- Assistance with accident transport and vehicle recovery
- Coverage for child car seats, up to £100 per seat
- Provision of a courtesy car throughout the repair duration in the event of an accident, provided the car is repaired by an NIG approved repairer
- In case of vehicle theft with no recovery or declaration of a total loss, a courtesy car is provided for up to 14 days or until a settlement offer is agreed upon (whichever occurs earlier)
What Happens if I Have an Accident?
Your vehicle insurance includes full accident management. We know that an accident can be a scary and confusing time so have worked to streamline our accident management as much as possible to avoid further confusion. You simply call our 24hr helpline on 0800 9177402 and one of our agents will help you.
How Does Servicing and Maintenance Work?
Your vehicle will be covered for all routine servicing and maintenance including in the event of a breakdown and recovery. You will also be covered for tyre replacement through wear and accidental punctures. You will not be covered for damaged tyres caused by negligence. All you need to do is call our 24hr dedicated driver number on 0800 9177402.
Is Car Tax Included?
Yes – your car tax (road fund licence) is included for the entire period of your lease agreement so you will not need to worry about making payment for this for the duration of your agreement.
Does the Car Still Have a Warranty?
Yes, your vehicle will have a full standard manufacturer guarantee exactly as if you had purchased the car yourself brand new. All cars leased through Wessex Fleet are brand new and depending on the length of the lease the warranty will last for the majority, if not the entirety, of the lease.
What are my Responsibilities for the Car as an Employee?
As the driver, it will be your responsibility to ensure that the vehicle is in a road-worthy and legal condition. This may involve you making regular checks of its condition and when maintenance work is required, following the appropriate channels for this to be promptly completed. If you are at all concerned about meeting these requirements or have further questions on the specifics then Wessex Fleet is available to discuss these with you.
What are my Responsibilities for the Car as an Employee?
As the driver, it will be your responsibility to ensure that the vehicle is in a road-worthy and legal condition. This may involve you making regular checks of its condition and when maintenance work is required, following the appropriate channels for this to be promptly completed. If you are at all concerned about meeting these requirements or have further questions on the specifics then Wessex Fleet is available to discuss these with you.
What are the Eligibility Criteria for Employees to Join the Scheme?
You will need to be over 18 years of age in order to qualify for vehicle insurance and so be eligible for the scheme.
The scheme is open to full-time and part-time employees as long as they satisfy the National Minimum Wage (NMW) threshold after the salary deduction has been calculated. We would advise a minimum salary of £25,000p.a. to be eligible.
You must be able to commit to the full term of the lease contract. You, therefore, need to think very carefully about the likelihood of moving jobs during that period to avoid possible early termination charges if you choose to leave the scheme early. You should also consider the financial commitment and the impact that it could have on any other changes in circumstances, such as having a family.
Your contract of employment must be for a longer duration than the salary sacrifice agreement. Therefore, employees on fixed contracts can still be eligible for the scheme provided the fixed-term contract is longer than the proposed salary sacrifice agreement.
Your employer may have its own eligibility criteria which will be communicated separately.
What are the Effects of Salary Sacrifice on my Pension?
By reducing your salary, your pension contributions are also likely to reduce as they are usually worked out as a percentage of your salary. We advise that you speak with your HR department or a pensions advisor to get individual advice on how salary sacrifice will affect your pension long-term and how you can plan to accommodate this.
How is my Company Car Tax Calculated?
The provision of an electric vehicle on a salary sacrifice scheme is a benefit to you. Therefore, in lieu of income tax and national insurance contributions, you will be subject to company car tax.
This is calculated by taking the P11D value of the vehicle (very close to the recommended retail price of the car) and using the CO2 emissions of the vehicle, applying a percentage charge. The reason salary sacrifice works so well for electric vehicles is that CO2 emissions are ZERO. For electric vehicles, that percentage charge is just 2% until March 2025. The Government will then review the BIK rate moving forward from that date.
For example, if the P11D is £30,000. Your BIK is 2% of this (£600 for the year). You then apply your relevant tax band. For example, if you are a 40% taxpayer then you will pay £240 for the year or £20 per month. This £20 per month is taken into account when we quote your NET salary sacrifice figure.
Will this Affect my Personal Credit Rating?
Your salary will be reduced when you take out a salary sacrifice arrangement. Therefore, this will affect the amount you could potentially borrow on finance or on a mortgage. However, you will not be credit checked personally to enter the scheme as the finance for the lease agreement is entered into by your employer so will not affect your rating when applying for the scheme.
What Happens at the End of the Lease for Employees?
We will be in touch with you roughly three to six months before the end of the contract to discuss your options to renew your vehicle. We will then work towards a smooth handover from old to new. You will be responsible for damages that are deemed to be above “fair wear and tear”. This will be charged to you by your employer at the end of the contract.
The industry is governed by the BVRLA in this respect, and we can supply you with a guidelines booklet for you to assess what may be chargeable. You can then decide whether you want to get it repaired yourself prior to the collection of the vehicle or pay the invoice from your employer. You will also be charged for any excess miles above what was agreed on in the contract. Again, this will be charged to you by your employer at the end of the contract. There is no option to purchase the car at the end of the lease but in certain cases, an extension may be possible.