The Electric Car Scheme – New EV, Tax Benefit! Really??
Earlier this year it was amazingly encouraging to hear that many viewers were planning on getting an electric vehicle in the next one, two or three years, but what if we could speed this up and get you driving a brand new electric vehicle right now? Well, today, im joined by tom groot from the electric car scheme, who have a solution that has the potential of getting more people in ev sooner rather than later, by using salary sacrifice. So tom, the electric car scheme sounds like a brilliant idea, but im really intrigued. As what motivated you, what why did you start it? We started the electric car scheme, mainly because we were really passionate about getting into electric cars and found this fantastic government benefit that allows you to do it through salary sacrifice at much lower cost. So when we tried to access that benefit, it was incredibly hard for us uh. We contacted the lease company and said you know, have you heard about this tax benefit? Can we set it up and the first question we got was well. Have you got over? A thousand employees, and then the answer was no. We were a small business, and so they wouldnt talk to us when we then fibbed about how many employees we had. We got served a price list that was 30 more expensive than the best lease on the market and when we asked why the lease company said well thats just our price list, you know we might be the best price on one car, 20, 30, more expensive um.
On another, and then lastly, when you read the fine print in the ts and cs, say an employee were to leave, you know if they were to fall ill or go on maternity leave or or resign youre left as the company stuck with the car and potentially Footing a heavy bill so youre not using for car that youre not using because your employee is left, so we set up the electric car scheme to solve those three issues, make it really easy for any business any size to access the government benefit access. The best leases in the market and take away the risk from offering this as a benefit to your employees, so say youve only got 100 employees and you dont, want to set up a complicated large company corporate car scheme, and the electric car scheme is a great Solution for you right and also from what i can gather a wide range of cars as well youre, not just doing you, know the cheapest, thats right yeah, so its its literally well work with all of the lease companies across the uk uh and can therefore access All electric cars that have got leases leases available so as opposed to kind of traditional lease companies who might have their own stock of car and one price list, which means sometimes you can get the car you want at the price you want. Sometimes they havent got the car you want. Sometimes the price is 30 more expensive than maybe the cheapest player in the market, and we work with all of them and that creates a real advantage for uh for people looking to switch uh to electric so tom, as anyone who works on fully charged will tell You im not that good with numbers tend to get them a bit mixed up.
So can you remind me how salary sacrifice works and why its so beneficial with electric vehicles? Yes sure so uh it can get a little bit tricky because taxes involved, but in simple terms, um when you get paid your salary and you get your monthly paycheck youll see your gross salary, then income tax and national insurance taken out of that gross salary. And what is the remainder you get into your your bank? Account? Is your net pay and what the electric car scheme allows you to do is pay for the car, not out of your net pay after taxes are taken out, but of your gross pay, which lowers your tax bill, lowers your national insurance bill and means youre left With more money in your bank account at the end of the month, instead, you pay a very small benefit in kind tax, because you are getting the the car as a benefit from your employer, but thats much much less than the tax you would have paid. Otherwise, right and thats how its possible to to to achieve these savings so maybe ill. Give you a couple of examples to talk through. You could get the new tesla model y on a four year lease that would typically cost you 654 pounds a month. If you were to get it yourself through the electric car scheme, youd save 283 pounds a month on income tax and national insurance. Instead, you pay your 51 pounds a month benefit in kind tax.
That means the net cost to. You is only 422 pounds a month. So significantly cheaper, you might be able to get a vw e up on a four year lease which normally would have cost you 245 pounds a month. Youd save through the electric car scheme 106 pounds a month in tax and national insurance contributions. Instead, you pay 22 pounds a month, benefiting kind tax, so the net cost to you is really only 161 pounds per month. The kia e near 002 um. If you were to get on a four year lease yourself that might cost you about 480 pounds a month through the electric car scheme, youd save 176 pounds a month on your income tax and national insurance. Instead, you pay a 33 pounds a month benefiting kind tax. So net cost to you would only be 265 pounds a month, significant saving, wow. That is a really big difference, and i mean the key in there is really good car. Our crew use one. They love it amazing and if you wanted to kind of have a look for yourself, because everyones tax rates, different everyone wants a different car, have a look on our website electriccarskeem.com and hit calculate your savings and itll work out exactly how much you could save by Using the scheme, so there are other car leasing companies working in this space. So what makes the electric car scheme different? What makes you stand apart yeah, so i think the the biggest thing is that were independent from from any leasing company, and that allows us to do two things really well.
First of all, we can work with any leasing company and any car provider in the market. That means at the moment, with the car shortage, we can access pockets of cars. All around the uk have better availability. You wouldnt be waiting quite as long. Secondly, every lease company has got a different price for every car. Well, you get the same new car at the end of it, so we can go to the leasing company that, for that specific car has the best price, which saves you on average, an extra 10 percent or 3000 pounds across the life of the lease, and then The last thing is our employer. Support is second to none, so we offer the best risk protection to employers, offering the electric car scheme as a benefit and offer them really expert advice on things like tax hmrc guidance. That just makes it much easier for a small, medium business to say yes to offering the scheme to their employees. So then, who is eligible to enter the scheme so its really any employee and business in the uk that wants to offer this as an employee benefit. So we work with employees from any any size, so anything as low as two employees all the way beyond a thousand um and theres no cost for the employer of setting up the scheme. There are typically two restrictions. We see employers say on entering the scheme. One is, they might only offer it to people after theyve passed their probationary period, because theyre signing up for a benefit for a long long time, and secondly, obviously after sacrificing their salary for the car, someone cant drop below minimum wage because it would fall foul of Minimum wage rules so thats the the one exception that you have to keep in mind and then in terms of employees.
What what are the benefits to them? I mean i can sort of see this yeah the biggest the biggest one is obviously that the tax savings are making it more affordable to to choose to go electric and get yourself to net zero, the other one is we make it as easy as possible. So we bundle in things like car insurance, maintenance, the charging point and installation and – and that makes it much much easier and then the last thing is just protection in case the car needs to be returned early, so you dont have to worry about. You know what happens if you go maternity leave. What happens if you fall ill? What happens if i go to another employer? We support on all of those things for employees so with car leasing. Generally, the the terms are like three, four or five years. So what are the arrangements with the electric car scheme? Yeah? We offer leases anywhere between one and four years, and what we find is most of our customers go for a three year lease, mainly balancing the cost. You know shorter leases tend to be a little bit more expensive per month and obviously the fact that they they dont, know if theyre going to be the same employer four years from now. So yeah two to three years is fairly common but, as i said, one to four years is possible. So clearly youve made getting your first dv a much simpler.
You know and cheaper process, but then once youve got it what about charging it. So i take my new electric car home and im looking for a plug socket on the wall of the house and there isnt one. As i explained, we try and make it as easy and simple as possible for our customers. So when you order the car – and you know you lock in your tax benefits, you also have the option to include a charge point and home installation to to make sure youve got charging at home. You can include car insurance. You can include servicing and maintenance of the car as well just to effectively bundle it all together and make it really easy for you to to make that switch, and then we also find typically with employers this once a number of their employees have got these electric Cars theyll also install charging units at the office to make it easy for those who havent got off street parking and or might need to. You know, drive further into the office and charge it at work, so we can also help with that. So if theres, a company boss or an employee at a big company or a small company, watching this, what whats the next step, where do they go to find out more yeah, so the easiest place uh to go is our website electric car scheme.com, where you can Do two things you can uh calculate your savings so based on the car, you want your your tax rate.
How much might this work out for you and you can also set up a call with one of our team to talk through you know. How do i go about setting up the scheme for my office and how do i roll it out to employees and how do we get as much uptake as possible and our friendly team are on hand to help anyone keen to sign up to the scheme? Our mission really is to make it as affordable as simple as possible, and the journey starts on electric asking.com. So thanks so much tom for your time today and really good luck with the scheme, i hope it goes really well. Thank you very much. Its been a been a pleasure, great stuff and all the links to uh the electric car scheme are in the show notes electric car scheme.com not that hard to to work it out and uh thats. All weve got for this episode.