Questions and Answers
Can electric cars be used in a salary sacrifice scheme?
I am a business owner and I want to improve my green credentials. I have heard that a way to reduce the emissions is to consider providing a salary sacrifice scheme for employees wanting to buy an electric car. Is this correct?
By Catherine Heinen, FCCAElectric cars can be expensive, and while many individuals would like to purchase an electric vehicle up to 56% are put off because of the price tag. As a result, many are choosing to stick with petrol and diesel cars.
As part of a business’ sustainability strategy, business owners may want to look at indirect (scope 3) emissions. This includes cars owned by employees that are driven for business purposes or commuting. These account for between 65 and 95% of most companies’ carbon footprint.
By encouraging employees outside of company car schemes to drive electric cars, companies can reduce their carbon footprint. At no cost to the employer, salary sacrifice schemes can be an attractive solution and enable employees to ‘sacrifice’ a portion of their monthly salary (pre-tax) to fund a vehicle’s monthly lease payments.
Date published 14 Feb 2024
This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.
Catherine Heinen, FCCA
Catherine is a Technical Content Writer at TaxAssist Accountants, and a qualified accountant. With experience working at two accountancy practices in the UK top 50 accountancy firms according to Accountancy Age, Catherine has significant experience in accounts, tax returns and advising clients. Catherine ensures businesses, business owners and individuals are kept up to date and informed by providing concise and informative technical material.
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