The Electric Vehicle Scheme is a tax-efficient employee benefit that allows employees to save significant sums on an electric vehicle lease. The EV Scheme is a government-backed benefit that encourages employees to go green and switch to electric vehicles.
Employees participate in the Electric Vehicle Scheme by sacrificing a portion of their salary in exchange for an electric vehicle lease, which usually includes insurance and maintenance. The lease is acquired under the employer's name, spanning 18-24 months, though the duration may vary. The lease cost is divided into monthly instalments throughout the agreement period. The deducted amount is processed from the employee's gross salary, leading to tax and National Insurance savings.
Employees save on National Insurance contributions and pay a significantly reduced Benefit in Kind (BiK) tax rate, which is currently only 2% and will remain at this rate until April 2025. From that point, it will increase by 1% year-on-year until 2028.
Offering the Electric Vehicle Scheme benefit to your employees provides multiple advantages. It demonstrates your commitment to environmental sustainability, acts as a powerful employee retention and attraction tool, and enables employees to save on National Insurance contributions and benefit from tax incentives, enhancing their compensation package and fostering loyalty and job satisfaction.
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