One of the best things about a company car scheme is that if done correctly, it can save both the employer and employee some serious money. Not only is it helpful for the commute and business travel, but it’s also valuable to employees' personal lives. Management will love it too, as it’s a great way to increase employee satisfaction and retention.
Having access to your own car is great. Now more than ever, it’s important to provide your staff with a healthy, sustainable and flexible travelling option. Encouraging your employees to use EV’s into their commute can lead to a healthier workforce and environment.
How does a company car scheme work?
An employee who signs up to a company car scheme will have to pay ‘Benefit in Kind’ tax. How much they pay depends on the car market price, fuel type, income tax band and amount of CO2 emissions. Because EV cars release no emissions, and the BIK is set as 0% for 2020, both parties here could save a lot of money.
The scheme is a contractual agreement between the employer and the car provider. It’s a way for companies to give their employees a new vehicle that’s insured and maintained at a cheaper rate than if the employee were to buy the car outright.
What if my company offers salary sacrifice instead?
Salary sacrifice means that an employee gives up a part of their salary in return for a car or other work benefits. Part of the employee’s salary is sacrificed before tax and National Insurance is taken, meaning a lot of the same tax benefits of an electric vehicle still apply.
Evezy offers salary sacrifice vehicles in the same way as company cars. To help you and your company make the most cost-effective decision, we have shown example costs of both below.
What does this saving look like in real life?
A lot of us have been put off switching to electric because we believe they come with a higher price tag and a long financial commitment.
Evezy removes the big upfront cost and the long-term financial commitment with an ‘everything included’ package, so you can overcome any of these concerns.
Now with the BIK set as 0% for 2020, opting for an EV as a company car scheme is actually more cost-effective than a petrol or diesel. For those of you who haven’t (yet) opted for an EV company car scheme, we thought we’d share some helpful information and benefits that come with switching to Evezy.
Here’s an example of what this means for a like-for-like ICE vs EV for 12,000 miles a year:
BMW 118d - £297 +VAT/month for 36 months. Initial 6 months rental of £1,714 and £24/month additional maintenance package.
Evezy BMW i3 - £404+VAT/month, 1 month rolling contract with insurance, maintenance & public charging included.
In this example, your business could save £1,000 per year by going electric with your company car or £800 through salary sacrifice!
Now onto the important part, how much money you can save as an individual.
Our chart above shows that for a 20% tax payer, the saving on either a company car or salary sacrifice is over £2,500 per year with an EV vs Non-EV- this increases if you're on the 40% tax band!
As shown above, you can make big savings on National Insurance (NI) contributions.
Enjoy REAL flexibility. You will never have to worry about being locked down into a car contract for 2+ years. With Evezy, we offer a 1 month commitment with everything included. If things change and your employee moves on from the business, you can return the car back to us.
Having this scheme available will help increase your company’s corporate social responsibility. Being socially and environmentally aware is important to employees and customers, so having a fleet of electric cars speaks volumes for your brand image and the company’s efforts to reduce its carbon footprint.
Sounds good? If you want to find out more info on our company car scheme and see how it could work for your company, click the button below and chat to a member of the team. 👋
* Assumes i) 50% lease rental VAT is irrecoverable & ii) All costs are subject to 19% Corporation tax (excluding 15% Lease rental costs which do not qualify for relief)
** Assumes i) 50% lease rental VAT is irrecoverable, ii) Employee sacrifices salary equivalent to lease rental including 100% VAT & iii) All costs/savings are subject to 19% Corporation tax (excluding 15% Lease rental costs which do not qualify for relief)
*** Assumes employee sacrifices salary equivalent to lease rental including 100% VAT