UK’s CBVC Vehicle Management is advising businesses to consider electric vehicle (EV) salary sacrifice schemes as a strategy to offset the recent increase in National Insurance Contribution (NIC) costs.
The employer NIC rate rose by 1.2% to 15% in April, while the payment threshold decreased from £9,100 to £5,000.
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The Institute for Fiscal Studies (IFS) estimates that this change could cost employers an additional £900 per employee annually, based on a median wage.
Salary sacrifice allows employees to exchange a portion of their gross salary for a fully maintained EV, reducing both income tax and NIC liabilities, which also results in lower employer NIC contributions.
CBVC Vehicle Management reports a strong uptake of its EV salary sacrifice solution among both new and existing clients.
The scheme, which was implemented at Champions UK earlier this year, now plays a “key” role in its HR benefits package and Environmental, Social and Governance strategy.
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By GlobalDataIndustry data from the British Vehicle Rental and Leasing Association (BVRLA) supports the growing popularity of salary sacrifice schemes.
Its April Leasing Outlook Report noted a 61% year-on-year growth in this funding method.
CBVC commercial director Michelle George said: “With employer NIC increasing, businesses are under growing pressure to manage rising costs. Introducing an EV salary sacrifice scheme is a smart, strategic way to significantly reduce your NIC bill while also boosting employee benefits and delivering on sustainability goals.”
The news comes amid an increasing availability of EVs in the market.
The Society of Motor Manufacturers and Traders (SMMT) recently reported that UK motorists have access to a record number of zero-emission vehicles, with two in five models being battery-electric.
This increase is attributed to manufacturers’ investments, offering over 130 battery-electric vehicles (BEVs), more than 100 plug-in hybrids (PHEVs), and approximately 50 hybrids (HEVs).
The SMMT states that manufacturers are committed to achieving zero-emission mobility. The average BEV can now travel almost 480km on a single charge, an improvement from last year’s 378km.
A number of BEV models even exceed 770km, more than twice the average weekly driving distance for motorists, according to the trade body.
For those not ready for a full transition, PHEVs offer an electric-only range of nearly 80km, with some models reaching 140km.
