Employer guide to salary sacrifice
Unlock flexible, affordable and zero emission driving as a benefit for your employees.
Introducing the UK’s first fully-managed salary sacrifice subscription service. Watch the video below to find out more!
For many people, salary sacrifice is the easiest and cheapest way to switch to an electric car, with savings of 30-60% possible through the government scheme.
Our fully-managed salary sacrifice service makes it quick and easy to set up your company offering this amazing benefit to your staff.
Read on to find out more about how Salary Sacrifice works for electric vehicles.
What is salary sacrifice?
- Employees sacrifice some of their salary in return for an electric car of their choice hired by their employer, typically saving 30–60% of costs through income tax and national insurance.
- Instead of subscribing directly and paying for the car from post-tax pay, the subscription cost is taken from pre-tax pay which reduces the employee’s tax liability and allows them to save an astonishing 30-60% of the cost.
- These savings help make the switch to electric cars not only possible, but also attractive for many. As a result, more and more businesses are using salary sacrifice to attract and retain talent while supporting a greener future.
Salary Sacrifice: Lease vs Susbcription
Subscription salary sacrifice – the most affordable and flexible way to get an electric car.
How much would you save?
Try our Salary Sacrifice Calculator
Want to know exactly how much you and your employees could save? Try out our salary sacrifice calculator. Simply input your employees salary, choose a car they might be interested in and we’ll calculate the estimated savings for you and the employee.
Key benefits of salary sacrifice
- Attract and retain the best talent with a high value perk
- Improve the environmental impact of your workforce
- Enjoy total convenience with elmo managing the scheme set up and all payroll & HMRC admin
- Avoid the risk and cost of early termination compared to a lease
- Pay nothing extra – there is no net cost to your business for elmo operating the scheme
- Save 30-60% on the cost of an electric car subscription
- Enjoy the convenience of an all-inclusive package that includes insurance, breakdown, maintenance & servicing, VED and more
- Choose from the largest range of subscription electric cars on the market
- Enjoy total flexibility by avoiding a multi-year lease contract
- Upgrade your car whenever you like
- Read through our employee guide for more information
Ready to browse our electric cars?
You can find more detailed information on salary sacrifice and the benefits of salary sacrifice subscriptions here.
You can also find a step-by-step guide to getting set up for salary sacrifice with elmo here: https://elmodrive.com/business/how-it-works/
Ready to get started? Just click the button below.
Are there any risks to the company?
We have tried to remove as much of the risk from the employer as possible. That’s why, unlike a salary sacrifice lease, with elmo there are no early termination fees if a staff member leaves the business.
If an employee leaves, can the car be reallocated?
Yes, 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).
Are sole traders and self-employed people eligible?
Unfortunately not, we can only provide our salary sacrifice service to incorporated entities e.g. LTD or LLC businesses.
Does a company need to be a certain size to be eligible?
Provided the business is an incorporated entity, we can operate the scheme for one-person bands and large corporations.
Does salary sacrifice for electric cars count as a non-cash benefit?
Yes! Which is why we’re pleased to now be able to offer this benefit to employers and employees alike.
How long does it take to roll out the scheme?
We’ve worked hard to streamline the process and take all the admin and legwork out of the process for businesses. We can usually get you set up in a week, then it just depends on how quickly you can engage your staff. Once they are enrolled, we can usually deliver their salary sacrifice car in a week!
How does payroll admin work?
For each Salary Sacrifice Subscription, we will send payroll instructions to you monthly detailing employee salary deductions and BIK amounts. We will also send you completed P46 (Car) forms to be submitted to HMRC at the start and end of each subscription, as well as the P11D form at the end of each tax year.
What rules affect salary sacrifice?
There are several rules that apply to a salary sacrifice scheme offered by any business in the UK:
- A salary sacrifice scheme is entirely at the discretion of the employee, and cannot be forced on an employee by their employer
- The scheme must not reduce an employee’s earnings to that which is below the national minimum wage
- To be eligible for a salary sacrifice scheme, the employee must be a permanent employee at the business
- The subscription is between the employer and the subscription company, so the employee cannot make amends to the contract directly with the subscription company
- The employer can’t withdraw the scheme from employees who are on long-term sick leave or maternity leave
What are the tax benefits of an electric car salary sacrifice scheme?
With an electric car salary sacrifice scheme in the UK, there are several attractive tax benefits.
An employee is not taxed on the salary they sacrifice as part of the scheme. However, employees are liable for benefit in kind tax, which is just 2% until the 24/25 tax year. With BIK as high as 37% for petrol or diesel cars, the benefits are huge.
Because part of an employee’s salary is given up, it also results in smaller National Insurance payments both from the employee’s and the employer’s point of view.