Ryan FowlerRivervale has reported a rise in battery electric vehicle leasing, with salary sacrifice schemes identified as a key driver behind the trend.
The Sussex-based leasing and vehicle management company said the schemes are becoming more popular with employers seeking sustainable, cost-effective benefits for staff.
Accountants Carpenter Box said that salary sacrifice arrangements offer significant tax benefits for both employers and employees.
Businesses can reduce their NIC liabilities while employees accessing a battery electric vehicle can benefit from a benefit in kind tax rate of just 3%, compared with rates of up to 37% for conventional cars.
The firm added that the Government’s newly announced grant for electric vehicle manufacturers, worth up to £3,750 in savings for households, is likely to accelerate adoption further.
Chris Reeves, partner and head of motor retail at Carpenter Box, said: “There are lots of moving parts at play that can explain the upward trend in BEVs, such as improving battery range and environmental considerations, but the financial benefits for both companies and individuals via salary sacrifice schemes and the newly announced Electric Car Grant will likely be key influencing factors.
“Employers benefit from a reduction in NIC, and potentially a VAT saving, both of which are important considerations given the rising costs of employment.
“Such schemes also underline a company’s commitment to reducing their carbon footprint.”
Businesses can reclaim 50% of the VAT on lease payments, regardless of private usage. Reeves added: “For all these reasons, salary sacrifice schemes, whether for electric vehicles or other qualifying benefits, should be given careful consideration as a way of mitigating rising employment costs while providing a valuable reward for employees.”
Vince Pemberton, CEO of Rivervale, said: “We’re seeing a real surge in demand for car salary sacrifice schemes as organisations look for cost-effective, sustainable ways to reward their people.
Employers tell us they love the scheme because it helps them attract and retain talent while giving staff access to brand-new, zero-emission vehicles at a fraction of the usual cost.”
The trend is reflected in the latest figures from the Society of Motor Manufacturers and Traders, which show battery electric vehicles accounted for 26.5% of all new cars registered in the UK.
