It’s entirely optional, but there are countless benefits for both you as the employer and your employees, which essentially make it a no-brainer to introduce.
Attracting and retaining top talent is crucial for the success of any business. In today's competitive job market, employers need to go beyond the basics and offer compelling benefits that set them apart from the rest. One increasingly popular option is salary sacrifice schemes, which provide employees with valuable perks while simultaneously saving the company money.
These schemes can offer different services at a reduced rate with plenty of monetary savings, and one of the best versions of salary sacrifice is for electric cars.
If you're looking to enhance your employee benefits package, Wessex Fleet can help you implement a successful electric car salary sacrifice programme.
What is Salary Sacrifice to an Employer?
Simply put, salary sacrifice for electric vehicles (EVs) is one of the most affordable ways for your employees to drive a brand-new vehicle.
A salary sacrifice arrangement is an agreement between you and an employee to reduce their entitlement to cash pay in return for a non-cash benefit. Under our salary sacrifice scheme, the driver will receive a fully insured and maintained leased electric vehicle in return for giving up a portion of their pay, which is equal to the cost of the lease and associated services.
By varying the terms and conditions of employment, the employee will receive a lower salary but will save on income tax and national insurance contributions resulting in the difference in take-home pay will be significantly less than the original amount of salary sacrificed.
As an employer, you can set up a salary sacrifice arrangement by changing the terms of your employee’s employment contract for a fixed period covering the length of the EV lease that your employee will need to agree to prior to any change.
A salary sacrifice arrangement must not reduce an employee’s cash earnings below the National Minimum Wage (NMW) rate. You must put procedures in place to cap salary sacrifice deductions and ensure NMW rates are maintained.
Salary Sacrifice Employer Benefits
Implementing a salary sacrifice program through Wessex Fleet can bring several advantages for your business, including but not limited to:
- Ability to attract and retain top talent: A comprehensive benefits package that includes an EV salary sacrifice scheme can be a powerful tool for attracting and retaining skilled employees. It demonstrates your commitment to providing additional perks and financial incentives beyond basic compensation.
- Cost savings: By implementing an EV salary sacrifice programme, employers can reduce their National Insurance contributions, resulting in significant cost savings. These savings can be reinvested into the business or used to enhance other employee benefits.
- Increased employee satisfaction: Offering attractive benefits through an electric car salary sacrifice scheme can improve overall employee satisfaction and morale. Employees feel valued when they have access to benefits that positively impact their financial well-being.
- Improved productivity and loyalty: When employees feel that their employer cares about their financial security and well-being, they tend to be more engaged, loyal, and motivated. This can lead to increased productivity and a higher level of commitment to the company.
There are also specific benefits for three key areas of your business: HR, Financial and Corporate Social Responsibility.
HR Benefits
- Significantly enhances the total benefits package on offer to employees
- Supports employee recruitment and retention
- Provides an ‘all employee’ benefit
- Bespoke schemes can be tailored to your individual corporate needs
Financial Benefits
- Reduces salary and National Insurance costs
- Controls salary costs via the effective use of flexible benefits
- Lowers business mileage reimbursement costs
Corporate Social Responsibility Benefits
- Improves your compliance with health and safety and duty of care legislation
- Reduces employee travel carbon footprint by encouraging them to move from older, less efficient grey fleet vehicles to safer and more efficient EVs
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:
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A fully electric vehicle leased on a term between two and four years
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Fully comprehensive insurance including business use
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An Accident management plan
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Full maintenance package including all servicing, tyres, MOTs Breakdown cover
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Long-term sickness/unforeseen circumstances cover
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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 partner with us:
- Expertise and experience: With years of experience in the industry, we have a deep understanding of salary sacrifice programmes and the intricacies involved. Our team of experts will guide you through the entire process, ensuring a smooth and efficient implementation.
- Tailored solutions: We recognise that every business is unique, and we take a personalised approach to develop salary sacrifice schemes that align with your business’s specific needs and goals. Our solutions are flexible, scalable, and designed to maximise the benefits for both you and your employees.
- Compliance and administration: Navigating the complexities of salary sacrifice can be challenging. Wessex Fleet takes care of all the administrative tasks, ensuring compliance with relevant regulations and laws. We handle the paperwork, calculations, and reporting, allowing you to focus on your core business operations.
- Ongoing support: Our commitment to your success doesn't end with implementation. We provide continuous support and assistance, offering guidance on vehicle fleet management, employee communications, and any updates or changes to legislation that may affect your salary sacrifice scheme.
Employer EV Salary Sacrifice FAQs
As a business owner, we understand you are likely to have plenty of questions regarding EV salary sacrifice schemes, so we’ve answered a wide range of common questions below. If we have not answered your specific query, please feel free to contact our friendly team and we’ll be more than happy to help.
Is Offering Salary Sacrifice to Employees Mandatory or Optional?
Whose Name is the Lease in?
The lease contract and all associated services will be in the name of the employer and not the employee. Therefore, all costs are payable and contracted to the employer. The use of the car is then provided to the employee in exchange for the amount of salary sacrificed. As this is then deemed a benefit in kind (BIK), the employee will need to pay company car tax. The rules on electric vehicle company car tax that runs until March 2025 make this a very cost-effective way of running an EV for company drivers.
How Does Insurance Work With Salary Sacrifice?
As part of the arrangement, insurance is included in the salary sacrifice deal. We have partnered with Lloyd Latchford, the UK’s leading salary sacrifice insurance provider. The policy will be in the name of the employer but can be tailored to the employee's individual circumstances.
What Does Insurance Cover?
The insurance premium is a true fixed price for the lifetime of the agreement and will cover:
- Social, domestic, pleasure and commuting cover, including use by the Policyholder in connection with their Employer’s business, is covered as standard. Other forms of business use for the policyholder and/or spouse/civil partner may be considered on a case-by-case basis but do not order a car without checking first. Any other drivers listed on the insurance (not partner/spouse) will only be covered for social, domestic and pleasure use
- Unlimited cover for audio and navigation equipment that is permanently fixed to the vehicle and has no independent power source
- Personal belongings in the car up to £350
- Replacement locks
- Damage to your vehicle following incorrect fuelling (No cover for removal of incorrect fuel and refuelling of the car)
- Emergency medical treatment
- Medical expenses, up to £350 per person
- Accident transport/vehicle recovery
- Child car seat cover, up to £100 per seat
- Courtesy car for the duration of repairs if in the event of an accident, the car is repaired by an NIG approved repairer
- If the vehicle is stolen and not recovered or if it is declared a total loss, a courtesy car is provided for up to 14 days or until a settlement offer is agreed upon (whichever is earlier)
What Happens if the Driver Has an Accident?
Your vehicle insurance includes full accident management. We advise you to provide all drivers with our 24hr helpline number, 0800 9177402, and that they keep this somewhere handy so that in the event they are in an accident they can make one simple phone call
How Does Servicing and Maintenance Work?
All vehicles under the scheme will include a full maintenance package. This means that they will be covered for all routine servicing and maintenance including breakdown and recovery. The package will also include tyre replacement through wear and accidental punctures, but damaged tyres caused by negligence will not.
For any maintenance work, all your drivers need to do is call our 24hr dedicated driver number on 0800 9177402.
Is Car Tax Included?
Yes! The car tax (also known as road fund licence (RFL) or road tax) is included for the entire period of your lease agreement.
Please note that the lease agreement will only cover this at the rate the vehicle is initially taxed at and if there is an increase to the RFL for a particular model then you may be charged the difference.
Will the Cars Still Have a Warranty?
Yes – any lease vehicle provided by Wessex Fleet is brand new and so will have a full standard manufacturer guarantee exactly as if you had purchased the car yourself brand new.
What are the Employer’s Responsibilities for the Car?
As a business, you have a duty of care towards all your employees and it will be your company’s responsibility to ensure that any company vehicle they are driving meets the requirements of health and safety legislation as well as any internal policy.
What is the Eligibility Criteria for my Employees to Join the Scheme?
Employees will need to be over 18 years of age to qualify for vehicle insurance and so be able to participate in 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 advise a minimum salary of £25,000p.a. to be eligible.
They must be able to commit to the full term of the lease contract. We recommend that you advise employees to think very carefully about the likelihood of a change in circumstances, such as moving jobs, during that period to avoid possible early termination charges.
The employee’s 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.
What Happens at the End of the Lease for Employers?
We will be in touch with your employees roughly 3-6 months before the end of their contract to discuss their options to renew the vehicle. We will then work towards a smooth handover from old to new.
Employees will be responsible for damages which are deemed to be above “fair wear and tear”. The industry is governed by the BVRLA in this respect, and we can supply you with a guidelines booklet for the employee to assess what may be chargeable.
Once your employee has reviewed the car in light of the guidelines they can then decide whether they want to get it repaired or pay the invoice from the employer at the end of the contract.
The employee will also be charged for any excess miles above what was agreed on in the contract. Again, this will be invoiced to the employee by the employer. There is no option to purchase the car at the end of the lease but in certain cases, an extension may be possible.