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Employers lag staff demand for EV salary sacrifice benefits

by Benefits Expert
21/08/2024
Green company car scheme
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Employers are lagging behind employee demand and expectation when it comes to offering salary sacrifice schemes for electric vehicles (EVs).

Research from Volkswagen Financial Services (VWFS) Fleet found that while 48 percent of employees want this EV-related benefit, less than a third (32 percent) of employers offer it.

The survey of 2,000 UK employees found that 79 percent of employees said it was important to them to work for a sustainable business, suggesting that the demand for EV salary sacrifice is not just about financial benefit. In addition, 33 percent said it was the most attractive eco-friendly workplace benefit.

Tax efficient

Dan Wright, product manager at VWFS Fleet, said: “A salary sacrifice car scheme – where an employee sacrifices part of their gross (pre-tax) salary for a new vehicle – is a highly valued financial benefit for prospective and existing workers. 

“At minimal cost to the employer, salary sacrifice offers employees affordable access to a brand new vehicle, with no upfront payments, early termination fees or hidden costs. It also includes all extra vehicle costs, including insurance, servicing, maintenance and breakdown cover.”

Such eco-friendly benefits could also help with talent attraction and retention, according to research from Deloitte.

The firm found that 55 percent of gen Z and millennial workers research a brand’s environmental impact and policies before accepting a job. It also showed that more than two fifths have already or planned to change jobs due to concerns about their employer’s sustainability.

Lower commute emissions

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The VWFS Fleet research also found that 75 percent of employees want to drive down the emissions associated with their commute and view EV salary sacrifice as being able to play an important role. Survey results showed that 67 percent recognised that the benefit helps to provide affordable access to EVs and 65 percent said they understand how it helps to reduce personal emissions.

Wright said: “Salary sacrifice schemes have a crucial role in incentivising EV uptake through attractive tax incentives. The benefit-in-kind (BiK) associated with EVs is currently just 2 percent, fixed until April 2025, then rising by just 1 percent each year until 2028. This remains significantly below the anticipated BiK rate for petrol/diesel vehicles, which could exceed 30 percent by 2028.”

He said: “Salary sacrifice provides workers with affordable access to a brand-new electric vehicle, which, for many, is an important transport transition they wish to make, but struggle to afford. However, there is currently a significant lag behind employee demand for salary sacrifice and employer provision.

“This presents a crucial opportunity for employers and HR managers to add to their employees’ remuneration package – with minimal cost to the business, but significant effects on talent attraction and retention strategies, as well as wider sustainability goals.”

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