Salary sacrifice remains the choice for everyone following Autumn Statement

Salary sacrifice remains the choice for everyone following Autumn Statement

Posted by

Charlie Strand

November 2022

Salary sacrifice is to remain the choice for thousands of employees wishing to move to electric cars.

Using the hashtag #ElectricCarsAreForEveryone, Fleet Alliance is campaigning to democratise the electric car through its employee electric car salary sacrifice scheme.

Following the Chancellor’s Autumn Statement, which saw benefit in kind taxation rates rise from 2% in 2025 to 5% by 2028, the substantial savings enjoyed by the funding method remain in place.

Andy Bruce, CEO of Fleet Alliance commented:

“The announcement by the Chancellor today to keep benefit in kind rates benign on electric vehicles will ensure we can continue to encourage as many drivers as possible to switch to zero emission motoring, whether they are company car drivers or employees benefiting from a progressive electric car salary sacrifice scheme.”

Andy said that drivers choosing a salary sacrifice scheme could drive an electric vehicle at a far more accessible rate than if they were to lease the same car privately, thanks to tax and National Insurance reductions1. While there is still benefit in kind tax to pay on the vehicle, he added, it remained at a significantly low rate to encourage the uptake of electric cars.

Chancellor Jeremy Hunt announced in the Autumn Statement yesterday (17 November 2022) that from April 2025, benefit in kind tax would rise in 1% yearly increments from its current rate of 2% until 2028.

“I think this gives the fleet sector the reassurance that the Government continues to support the green agenda, and ensures we can continue working with employers who wish to drive their ESG2 agenda forward. With salary sacrifice they can do that by offering electric cars to all their employees who don’t qualify for an electric company car,” added Andy.

The Chancellor also announced that Vehicle Excise Duty (VED) – more commonly known as road tax – would also apply to electric cars from 01 April 2025. This means that the first year VED will rise from £0 to £10, and then to the standard rate of £165 in the second year.

“While this is an additional cost I don’t believe it’s enough to dissuade drivers from the many benefits of switching to electric,” added Andy.


1 To illustrate the savings available on salary sacrifice, Fleet Alliance cites the example of a 40% tax payer taking an electric MINI Cooper SE based on a 36-month contract covering 5,000 miles a year.

If an employee was to lease the MINI personally out of post-tax earnings, the car would cost £643 a month on a like-for-like basis which includes servicing and maintenance.

However, under the Fleet Alliance salary sacrifice programme, the same electric MINI would cost the driver just £356 a month, including all BIK tax, servicing as well as maintenance.  Over the three years of the agreement, the electric car salary sacrifice would save more than £10,000.

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