Since a recent Tax Bite (https://forbesdawson.co.uk/employee-incentive-arrangements/2020/01/17/electric-company-cars-for-employees/) we have been inundated with queries from employers and employees about how electric car salary sacrifice schemes work in practice. In fact demand has been so high that we have teamed up with a local firm of solicitors to offer a ‘one-stop shop’ electric car employee incentivisation programme advisory package (watch this space!).
The main advantages of electric cars are as follows:
Most organisations with significant employee numbers are now looking at ways to tap into these benefits and broadly three approaches are being taken here:
1. Use as a low cost employee incentivisation and retention mechanism. Here all benefits are transferred to the employee.
2. Employer and employee both end up financially better off. Here, any savings are shared between the employer and the employee. In other words the employer will spend less than the salary would have cost to provide the employee with more than they could have afforded with their net salary.
3. Most of the benefit is passed to the employee but the employer retains employer NI savings.
Although, this is a very positive opportunity it should be entered into carefully. The following approach should generally be taken:
This process takes time to implement and employers should be starting it now to get ahead of the curve.
We think that this is the biggest employee tax incentive since childcare vouchers and it is much more widely applicable. This is something that simply cannot be ignored by businesses with a significant number of employees. Feel free to speak to your usual Forbes Dawson advisor about our ‘one stop shop package’.
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