Electric Vehicle Salary Sacrifice Scheme

Salary Sacrifice Explained

An employer will engage with a vehicle leasing company (e.g. Peter Vardy Leasing) and arrange the lease of a pure-electric car at an agreed rate on behalf of their employee. The employer provides the car to the employee as a company car in return for a salary contribution each month, otherwise known as a salary sacrifice.

The cost of the car is deducted from the employee’s gross salary, meaning their income tax and National Insurance Contributions (NIC) are calculated based on the lower salary amount. Effectively, the employee will pay lower contributions towards income tax and National Insurance each month.

And it’s not only employees who benefit from cost savings. Employers will also pay reduced NIC each month as they will be paying their employees based on the lower salary amount, after the cost of the car is taken.