Asset finance firm Lombard has introduced a new salary sacrifice scheme aimed at helping drivers transition to electric cars. This move comes as part of a growing trend among businesses to offer tax-efficient car schemes as a benefit to their staff.
Understanding Salary Sacrifice
Salary sacrifice is a system where employees agree to give up part of their gross salary in exchange for non-cash benefits, such as leasing a car. The term “gross salary” refers to an employee’s total pay before any taxes or deductions. In Lombard’s scheme, employees can use this mechanism to lease electric and plug-in hybrid cars.
Key Benefits for Higher-Rate Taxpayers
Higher-rate taxpayers, who pay more income tax due to their higher earnings, stand to gain significantly from this scheme. On average, they can save around 43% of the leasing cost of a brand-new EV. For instance, if an employee sacrifices £600 a month from their gross salary towards their car lease, they could save £288 compared to if they had paid for it out of their net salary (after tax and other deductions).
Why This Scheme is Attractive
The scheme is particularly appealing due to its all-inclusive nature. It covers a wide range of electric and plug-in hybrid vehicles and includes maintenance, insurance, road tax, and more. Employees can also add a home charge point to their order and spread the cost over the lease term using salary sacrifice.
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Interest in Salary Sacrifice Schemes
Interest in salary sacrifice schemes is on the rise, with a survey by the British Vehicle Rental and Leasing Association (BVRLA) indicating that 80% of businesses are likely to introduce such a scheme. Businesses see it as a way to offer valuable benefits to employees while also reducing their carbon footprint.
Partnership with ALD Automotive | LeasePlan
Lombard’s new product is developed in collaboration with ALD Automotive | LeasePlan, providing an all-in-one solution for businesses with more than 250 eligible employees. The scheme includes a digital interface that allows employees to browse car models, choose vehicles, and select payment terms and mileage. It also offers a free EV Planner tool to help businesses assess their employees’ readiness for EVs and identify necessary charging infrastructure.
Stuart Clark’s Vision for the Future
Stuart Clark, head of climate transition at Lombard, highlights the transformative potential of electric vehicles. He compares the salary sacrifice scheme to the cycle-to-work schemes, noting its attractiveness as an employee benefit that also supports environmental goals. Clark emphasizes that the scheme has no set-up costs for businesses, making it an easy and cost-effective way to provide a significant benefit to employees.