Introduction to Salary Sacrifice

Salary sacrifice schemes have been around since the 1970's, offering a win-win solution for both employers and employees to save on cost and taxes. Over time, salary sacrifice has evolved into a useful tool for employees to benefit from pension plans, child care costs and most recently, electric cars.

The net zero electric car scheme is becoming increasingly popular due to the National Insurance contribution and tax savings it offers. With benefit-in-kind subsidies at just 2%, this has made it more affordable for employees to switch to cleaner electric vehicles, which for many is a new car bonus. For employers, this encourages positive staff recruitment and also retention.

So, how does salary sacrifice work?

Employees can choose to sacrifice the non-cash benefit part of their salary in return for a new car. This sacrifice takes place before tax and National Insurance contributions are deducted, which means that employees save money on taxes and NI. While taking home less salary may seem daunting, the significant savings for both parties make it well worth considering, especially if you are opting for net zero (fully electric) vehicles.

The vehicles of choice for salary sacrifice are usually EV's. The package often includes full maintenance and servicing, tyres, breakdown recovery throughout the UK and Europe, vehicle insurance and a choice of charging points. Early termination insurance is also available.

AVC has been specialising in all aspects of vehicle leasing, funding and finance for over 25 years. You can directly compare all options online and configure them with your employer's employee salary sacrifice quote and savings summary on the car of your choice in a matter of seconds.