Setting Up An Salary Sacrifice Electric Car Scheme UK

What Is A Salary Sacrifice Electric Car Scheme And Why Are They Important?

A salary sacrifice scheme works just like workplace pension and cycle to work schemes. It’s based upon an agreement between you (the employer) and your employees.

The scheme allows your staff to sacrifice part of their gross monthly salary in return for a non-cash benefit. In this case, we’re talking about electric cars.

These salary sacrifice schemes are popular because of their benefits. These include:

• Government tax savings for employees
• Lower National Insurance Contributions for employers and employees
• Provides a valuable employee benefit
• Boosts a company’s carbon footprint
• Lower business expenses
• Increased employee engagement and productivity
• Improved brand reputation
• Convenient fixed monthly costs.

As it costs very little to set up and run a scheme, it’s a low-risk, highly valuable benefit.

What Does Your Company Need From An Electric Car Salary Sacrifice Scheme?

Before you go ahead with setting up an electric car scheme for your employees, you should consider what your company needs from it.

Why Do You Want To Offer The Scheme?

There’s likely a reason why you’re considering setting up an electric car scheme for your employees.

• Do you want to improve employee engagement and retention?
• Does your company have sustainability goals to reach?
• Has an employee asked about it?
• Is it the minimal costs involved?

These are valuable things to think about when it’s time to look into different scheme providers.

What Do Your Employees Want From The Benefit?

It might seem obvious, but what’s the point in setting up an electric car scheme if no one cares? Suggest the scheme to your entire team and see what they think. The following questions are a good starting point:

• How much can they afford to spend on an electric car?
• What extra support may they need?
• Is there a range of cars to suit everyone?
• Are there any add-ons they would like, such as home charger installation?

It’s essential you find out who is interested and their individual needs. This will help you set up a scheme that actually benefits your employees. Getting everyone involved will also help you choose the right scheme provider.

How Much Do You Want To Spend?

While an EV salary sacrifice scheme is free to set up, there are some costs to be aware of:

• Early termination fees if an employee leaves the scheme early or resigns
• Lease costs if an employee is unable to work due to long-term sickness
• Car insurance and cancellation insurance (depending on the scheme)

Fees and lease costs can be deducted from the employee’s pay, but you still have to cover the costs first. Remember that these situations aren’t guaranteed to happen, but it’s best to be prepared.

See how much your business can afford to spend on the scheme and don’t forget to factor in these possible extras.

These are very important things to be aware of. You don’t want to be caught off guard and have to pay out for something unexpected.

Nadeem Farid
Head of Employee Benefits at Drewberry

How Will It Work Alongside Your Existing Employee Benefits?

Another thing to think about is your existing employee benefits. If you already offer a range of perks, how will the EV salary sacrifice scheme fit in? It could impact the management of your existing benefits.

So, before you jump into setting up an EV scheme, you need to figure out how the scheme will be managed. Will there be extra admin for your company to deal with? Do you have the time and resources to manage the scheme effectively? Can your business easily set it up with minimal disruption?

Some providers will help with admin tasks, payroll set up and employee support, so that the scheme doesn’t add more to your to-do list. This makes it more convenient and manageable for your business.

Before Setting Up Your Electric Car Scheme

Before setting up a salary sacrifice electric car scheme it is important to think about the following.

Research And Compare Salary Sacrifice Electric Car Schemes

Firstly, it’s important you prepare and consider the following questions:

• Employee budgets – is it affordable?
• Management of the scheme
• Your responsibility as the employer
• The admin involved
• Which scheme provider is the right one for all your employees
• The level of support offered by scheme providers
• Availability of different electric car models.

Research is the first thing you should do. This is key to ensuring you choose the right scheme provider for your company. Here are a few questions to think about:

Who Will Manage The Scheme?

Following on from your research think about who will handle the scheme. Some car leasing companies supply account managers as part of the package to help with the setup and maintenance. Does your company need this?

If the responsibility is given to an employee, make sure they understand their role. Let the wider team know who’s in charge too.

What Ongoing Support Do Providers Offer?

When researching different schemes, find out whether they provide extra support. This might include things like:

• A dedicated account manager to help set up and run the scheme
• Various methods of contact
• Portals with personalised EV quotes for employees
• Exclusive charging offers
• Carbon reporting to see how your scheme is benefiting the environment
• Payroll reporting and invoice support.

How Long Is It Going To Take To Set Up?

Try to get a rough time frame from the providers you are most interested in. Octopus EV scheme can take up to 10 working days, for example. Bear in mind this involves a lot of admin, like credit checks, eligibility confirmation, and payroll updates. This can lengthen how long it takes to set up a salary sacrifice scheme.

You also need to factor in how long it will take for your employees’ to choose and receive their new electric car.

What Are The Terms And Conditions?

Here’s the boring but essential bit. Make sure you have read the terms and conditions carefully when choosing a provider. Your employees should have access to these documents too.

• Is the lease agreement clear?
• Do you understand what’s included in the scheme and what isn’t?
• What are the terms for cancellation?
• What happens if an employee is made redundant while part of the scheme?
• Or a member of staff is not working due to sickness?

Setting Up A Salary Sacrifice Electric Car Scheme

Once you’ve done your research you can start the process of implementing a scheme. We’ve outlined how you can go about doing this below.

1. Choose An Electric Car Salary Sacrifice Provider

You’ve done the research and decided that an EV scheme is a good fit for your company. Now it’s time to choose a scheme provider that suits your employees.

There are many electric car scheme providers out there, and they tend to vary in what they offer. It’s worth talking to several providers to compare specifications and see which one is best for your business.

2. Make A Plan

After contacting them, you can be sure about what they offer, what the process looks like and what you need to do to complete the set up. This will make it easier to create a plan for launching the scheme.

Start thinking about how you’re going to communicate the electric car scheme to staff. The plan should explain how the scheme is going to be managed, risk management factors (like cancellations) and success metrics. It should also include timeframes for set up, from contacting the providers to employees receiving their new car.

Need Help Getting Started?

We know that there’s a lot involved with setting up an EV scheme, so it’s understandable if you’re struggling to decide which provider is the best. You might still be confused about how to set it up. If this is the case, it might be worth speaking to an independent employee benefits advisor to help you out.

The good news is that we can help you get your scheme started! You can get in touch with one of our expert advisors by calling 02074425880 or through email at help@drewberry.co.uk.

3. Roll Out Your New Salary Sacrifice Car Scheme To Your Employees

Hopefully you know everything about car salary sacrifice schemes and have chosen a provider. Now, to roll out the scheme to your employees.

Educate Employees About Salary Sacrifice And The Electric Car Scheme

Salary sacrifice schemes are more complicated than other employee benefits, like holiday entitlement and gym discounts. So, it’s vital that you clearly explain what salary sacrifice means and how it impacts an employee’s income.

They need to understand the implications of salary sacrifice. It’s a long-term commitment that may affect an employee’s eligibility for a mortgage and other loans. Make sure your team also knows about the benefits of an electric car salary sacrifice scheme.

Communicate And Keep Communicating

Communication is key to the success of your EV scheme, and it goes beyond just setting it up. Here are a few ways to introduce the scheme to your employees:

• A company-wide email providing an overview
• Staff meetings for further discussion
• 1-2-1’s to answer questions.

To keep engagement levels high, continue to talk about the scheme, how it works and the benefits it can offer. You may get more sign ups!

Often, employees don’t make the most of the perks offered to them and they miss out. So, reminding them about the scheme regularly can encourage them to get onboard.

Some employees may be apprehensive about signing up if they don’t understand the scheme. Not only is it a serious commitment, it’s also quite complex to understand. They need to be aware of how it impacts their monthly salary and what the tax implications are. Communication is your key tool here.

Utilise Your Provider’s Resources

When rolling out the scheme, don’t forget about any resources the scheme provider has given you. Most supply marketing materials to help clients better understand how the scheme works. Make the most out of these when you’re communicating with your team.

Providers sometimes offer advisors to support employees, so ensure they can contact them. Advisors are on hand to assist with car selection, delivery and ongoing queries, and more.

They can also help with the business side of the scheme, including payroll, HMRC, tax and National Insurance, and admin. Utilise all resources! It will make setting up your electric car salary sacrifice scheme much easier.

4. Measure Engagement And Review The Scheme Regularly

Even though you’ve set up the scheme, the management doesn’t stop there. It’s important that you measure the success of the scheme.

As a business, you need to review the scheme often to see how many team members are signed up. If they aren’t signing up, try to find out why. It might be a good idea to see what you can change or even swap it for a different benefit.

Get Feedback

Find out whether your team is enjoying the employee benefit by asking for feedback. You can create feedback forms or surveys to email to the team and get their opinions on the scheme. Here are some things to assess:

• How many employees have signed up?
• Do they find the process easy?
• Have they faced any problems?
• Is there anything they would like to change?

This will tell you whether an electric car salary sacrifice scheme is a good idea, and if any changes can be made.

Make Changes If The Scheme Isn’t Working

Your employees feedback might tell you that some staff have had issues with the scheme. If this is the case, you need to take action, otherwise you’re offering a perk that isn’t benefiting everyone.

Employees may have found the process difficult or don’t understand how it works. So, you might need to improve communication about the scheme. Plan more staff meetings to explain the scheme further and answer any questions.

Still unsuccessful? It might be a sign to consider another employee benefit!

Compare Employee Benefits Quotes And Get Expert Advice

Your employee benefits should provide value to your staff, which is why it’s best to tailor your benefits to your team’s needs.

If you need more guidance on setting up a salary sacrifice scheme, or want help with your employee benefits, we can help. Get in touch with our financial experts today.

Why Speak to Us?

We started Drewberry™ because we were tired of being treated like a number.

We all deserve a first class service when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to talk to us.

• We are award winning 🏆 independent insurance advisers who work with all the leading UK insurers
• You’ll speak to a dedicated expert from start to finish
• We are very proud of the 3770 and growing independent client reviews rating us at 4.92 / 5
• We are authorised and regulated by the Financial Conduct Authority. You can find us on the financial services register here 🧐
• Claims support when you need it most.