The growth of the electric car market is booming, with electric cars making up 17% of new car sales in September 2022. But many people are still concerned about the costs associated with buying a new EV outright with the average price of an electric car coming in at around £44,000.
The great news is that there are cheaper and easier ways to drive electric! Did you know you can save up to 40% on an electric car when you take one through a salary sacrifice scheme?
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How can I get an electric car through salary sacrifice?
Because there are some great tax incentives for employees and employers alike, electric car salary sacrifice is fast becoming a popular and cost-effective way for employers to encourage their teams to start driving electric.
Electric car salary sacrifice is an employee benefit that allows your team to get access to a brand-new EV in one easy monthly payment that comes out of the employee's gross salary. This payment reduces their net pay, which then lowers the amount of Income Tax and National Insurance they have to pay overall. Depending on how much tax they pay, they can make savings of up to 40% on a brand-new electric car.
We are on a mission to get the world driving electric for a fairer, greener future. Our sister company, Octopus Electric Vehicles, offers an electric vehicles salary sacrifice scheme as an employee benefit to some of the UK’s top companies. They work with employers looking to incentivise their teams to switch to electric cars, reduce their carbon footprint to meet their Environmental, Social and Governance (ESG) goals and give their team access to significant savings on brand-new electric cars as a perk. Win-win!
How does Octopus Electric Vehicles salary sacrifice work?
Employers can sign up for the electric car salary sacrifice scheme totally free of charge. It gives their employees the choice of more than 60 models of brand-new electric cars that they can get through their salary.
The driver's monthly salary sacrifice payment covers everything they could possibly need to hit the road. They get their brand-new electric car, maintenance, insurance, tyres, MOT and roadside assistance from the AA. Octopus Electric Vehicles even throw in a free home charger or 4,000 free miles with Electric Universe to get them on the road.
All of the car running costs are covered under the scheme. Taking into account the savings made through Income Tax, National Insurance and lower running costs, salary sacrifice almost always makes leasing a brand-new electric car cheaper than buying a car.
At the end of the agreed term, the employees just hand the car back to Octopus Electric Vehicles. Simple!
How much does an electric car cost through salary sacrifice?
How much employees pay for their salary sacrifice car depends on a few factors. These include the:
Expected annual mileage
Length of the agreement
Because the employee's electric car is a benefit through their employer, there will be a small amount of Benefit in Kind (BiK) aka company car tax to pay. This is currently 2% for electric cars. It’s worth noting this is currently fixed until April 2025 at 2%, after this time it could increase, and a rise in BiK would increase the amount paid for the car.
What’s included in the Octopus Electric Vehicles salary sacrifice scheme?
Octopus Electric Vehicles offer absolutely everything needed to hit the road in a new electric car. There’s nothing to think about, other than getting charged up to get from A to B.
Brand new electric car
Octopus Electric Vehicles have 28 makes and 67 models of brand new electric cars to suit the needs of all drivers, and their EV experts help customers understand how driving electric can work for them, whatever their lifestyle.
Unlike a typical lease, there’s no upfront payment for a car on our salary sacrifice scheme. Drivers know exactly how much they’ll be paying for their car out of their monthly income, without needing to factor in a lump sum at the start.
Electric car charger and installation
As we’re all part of the Octopus Group, we’re lucky to have a whole ecosystem supporting drivers to switch to electric. Our sister company Octopus Energy Services provides and instals home chargers completely free of charge. They take care of everything!
The Intelligent Octopus tariff from Octopus Energy is designed especially for electric car drivers. The tariff gives our drivers 6 hours of super-off-peak green energy from 11.30 pm to 5.30 am. Drivers simply plug in their car at night before bed and wake up with a topped-up vehicle in the morning, taking advantage of the super cheap rate.
Drivers that don’t have a driveway or off-street parking will get 4,000 miles worth of credit with Octopus Electroverse. Our public charging network in the UK has over 50,000 charging points, which makes switching to electric easy for those without a driveway.
Most employers choose to take our insurance as part of their salary sacrifice scheme, so employees never have to worry about renewals or additional monthly payments for fully comprehensive insurance on their new electric car. It’s all included in the monthly payment.
Servicing, maintenance and repairs
The salary sacrifice scheme includes servicing of the car to keep it in tip-top shape. All maintenance is covered by the monthly payments, so there aren’t any unexpected repair bills to worry about.
All drivers get access to roadside assistance for breakdown and recovery from the AA, so they’re always well looked after on the road.
Punctures and sidewall damage are all covered under the Octopus Electric Vehicles salary sacrifice scheme, and they’ll replace all four tyres on a car within Fair Wear and Tear conditions within 20,000 miles, free of charge.
Nobody wants to worry about an unexpected bill when they return their car at the end. There’s a damage waiver over and above any Fair Wear and Tear on return so drivers are covered for any minor scrapes, scratches or repair work.
With the Octopus Electric Vehicles salary sacrifice scheme, all drivers need to do is charge the car, get out on the road, and enjoy it!
Drivers never have to find another insurance broker to cover their car, or garage to do their repairs. It’s all covered by Octopus Electric Vehicles under one roof.
Salary sacrifice is the hassle-free way for drivers to keep their brand-new electric car pristine and running in tip-top shape.
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