This varies depending on whether the car is considered a company car, or a personal car being used for business travel. For company cars, the Government currently advises a rate of 5 pence per mile for fully electric cars. Hybrid cars are treated as either petrol or diesel for fuel rates – see the Advisory Fuel Rates for more information. If employees use their own personal vehicle (as would be the case with an elmo subscription), the Mileage Allowance Payments for electric cars are the same as for ICE vehicles: 45p per mile for the first 10,000 miles per year, and 25p per mile after that.

Provided your salary does not go below £20,000 per annum after all deductions are made and provided your employer approves, you can usually take up to 2 cars on the Scheme. If at any point your salary does go below £20,000 per annum, your employer will no longer be able to make the usual salary sacrifice deduction pre-tax, so you must either agree to a deduction from your net salary, reimburse your employer from other private means or return the car.

With elmo you can choose any of our available models for salary sacrifice, provided that the cost does not reduce your statutory pay below minimum wage.

No, our salary sacrifice cars can be used for both business and personal use.

If your company is VAT registered, we will calculate the change in VAT for your VAT returns. You can usually reclaim 50% of the VAT on the subscription and 100% of the VAT on any ancillary services and other charges. The invoices you receive monthly for each subscription include a breakdown of VAT to support your reclaims process.​

A company director will need to sign an Admin Services Agreement granting elmo the right to run the scheme for you, a Subscription Agreement for each Subscription Order and an Employee Subscription Agreement for each employee.

Under the scheme, you reduce your annual pre-tax salary in exchange for an electric car subscription as a benefit provided by your employer. 

By reducing your salary and receiving the benefit in return, you save on income tax and National Insurance. You do incur a benefit-in-kind tax (“BIK”), but the BIK rate on electric cars is only 1% in 21/22 tax year and 2% for the three following years. Your total savings after everything is taken into account should be between 30% and 60% of the advertised subscription cost (depending on your salary).

To set up a salary sacrifice arrangement, your employer will need to change the terms of your employment contract and you will need to agree to this change in order to participate in the scheme. Your employer will also have ultimate discretion on which employees are eligible.

With elmo, because employees pay for their electric car subscription via salary sacrifice, the cost of running the scheme for your business is effectively zero. Unlike multi-year leases, we also don’t charge your business early termination fees in the event you choose to discontinue the scheme or an employee leaves the business.

Salary sacrifice cars are not company cars but are still viewed as an employee benefit by HMRC. This means that the car’s value as a benefit-in-kind (BiK) is taxable. Benefit in Kind (BiK) tax is a form of tax an employee has to pay for receiving a perk or benefit related to their employment, and this perk can be used during our outside of business hours.

To qualify as a benefit with HMRC, the subscription must be kept for a minimum of 12 months, after which it can be ended with 30 days’ notice. There are some instances where the car may be returned early. If you leave your company, we can either take the car back with no early termination fee or we can switch the subscription to a different employee (provided they are eligible).

The employer cannot withdraw the salary sacrifice benefit from staff who take maternity leave or long-term sick leave, and who are faced with a reduced salary as a result, as it is part of their terms and conditions of employment. However, employers could end up facing contract early termination costs, if those are applicable.

If you buy a new EV outright, or finance it using a traditional car finance product, you will end up paying significantly more for the car and depending on low running costs to offset the high price. If you’re leasing a car through a personal contract hire leasing contract, it’s much of the same thing. As explained above, the government-backed salary sacrifice scheme allows employees to reduce their cash earnings in return for a non-cash benefit, including a car. Because the deduction is made before income tax is applied, the scheme can represent a significant saving over a normal finance product, which you pay for from your after-tax salary.