There are many benefits of driving an EV, both for the driver and the planet, so it’s no surprise that they’re becoming more and more popular as company cars. If you’re considering introducing a company car scheme for your business, this handy guide will help you understand how both you and your employees can benefit from using EVs for your scheme.
What is a Company Car Scheme?
A company car is a car provided to an employee for both business and personal use. It is considered a ‘benefit-in-kind’ as it is a non-cash benefit paid by the employer. These schemes often involve a ‘salary sacrifice’ and are a way for employees to drive an EV without the upfront cost.
The basic premise of a salary sacrifice scheme is; employees give up some of their gross salary each month and are then able to drive an electric car for less than they would if they had leased it privately.
A salary sacrificed car is leased by the employer, on the employee’s behalf.
One of the most appealing features of a salary sacrifice scheme is that the deductions are taken out of the employee’s gross salary (before tax), meaning that the amount of income tax and National Insurance they pay each month will be lower.
Although EVs leased through a company car scheme are still subject to Benefit-in-Kind tax (biK), the rate for an EV is still lower than that of a fuel or hybrid vehicle, meaning a salary sacrifice scheme is one of the most cost-effective ways to drive a brand-new electric car.
Benefits of Using Electric Vehicles (EVs) as Company Cars
Electric Vehicles (EVs) are quickly gaining popularity both as personal and business vehicles. There are a number of reasons for this, and you can read more about the benefits of EVs for business here.
But the best justification encouraging more drivers to switch to electric, is the decreased detrimental effects on the environment. EVs have zero tailpipe emissions, and some are even able to run on renewable energy, making them a much cleaner, greener choice for your business transport. Introducing EVs also shows a forward-thinking and environmentally positive initiative which is likely to impress both potential customers and staff.
In recent years, EV charging infrastructure has come along in leaps and bounds, meaning driving an electric car is becoming more accessible for everyone. And with the government aiming to phase out the use of traditional fuel-reliant vehicles, this accessibility and convenience is only apt to increase.
Things to Consider Before Implementing a Company Car Scheme
As with all business decisions, there are a lot of factors to consider before making any changes. Firstly, you need to decide if a company car scheme is the right fit for you, your business, and your employee’s needs.
You should consider the following:
- Staff turnover rate; if you have a high turnover rate, it may be unlikely that employees will be able to see the scheme through. This would result in them having to pay an early termination fee from their final salary, which could lead to them leaving on bad terms.
- Employee wages; If a significant number of your employees earn lower wages, it is essential to ensure that reducing an employee’s salary to contribute to the company car scheme does not result in their income falling below the minimum wage, rendering them ineligible for the scheme.
- Types of vehicles; when deciding on a provider for your scheme, you should look at the range of available vehicles they have, to ensure they have the right vehicles to fit your business needs. You might also consider offering more premium vehicles to longer-serving staff, to act as both a reward for long standing commitment and an incentive for staff retention.
- EV charging; If you are going to start using EVs in your workplace, you should also consider installing charge points on your premises. This not only increases convenience for any staff driving company EVs but also gives you the option to rent them out to customers, giving them even more reason to visit your business and stay a little longer.
Benefits of Company Cars to Employees
The opportunity to drive a company car is very attractive to employees, both new and existing. Having a sought-after staff perk lets your employees know that you care about them and want them to feel appreciated and seen, whilst showing potential new recruits that you have your employees’ best interests at heart.
The most obvious benefit to employees, is that they get to drive a brand-new electric car and can also try-before-they-buy. For example, if they have been considering an EV for a while, or are on the fence about it, they can drive a company car without the commitment of owning it themselves, and without the hefty upfront cost.
Employees in a company car scheme will also be saving money when it comes to insurance and maintenance costs, compared to if they were buying a car themselves, as these fees will already be paid for by the employer. They will also benefit from the lack of depreciation costs. Usually, when buying a car, the value decreases with each new ownership, but with a company car, not only will this not be a concern, but the employee will not have the stress of selling the car in the future.
Benefits of Company Cars to Employers
An EV company car scheme is not just good for employees, but also for employers, the business, and the planet. Switching from a petrol or diesel car to an EV can save around 1.5 tonnes in CO2 emissions each year. By going electric, you can decrease your business’s carbon footprint and modernise your image at the same time.
Another factor that sets EV company cars apart from traditional internal combustion engine (ICE) cars is the significantly reduced maintenance costs involved. As EVs use a battery, rather than an engine, there are fewer moving parts involved, meaning less can go wrong. This results in peace of mind for your employees and less outgoings for you.
Company car schemes, especially electric ones, are great for your brand image. Not only do EVs decrease your businesses carbon footprint but they also show that you are doing your bit to reduce emissions whilst moving with the times and working towards your corporate social responsibility goals. Climate change is a very real concern for many people but knowing that they are working for or giving their custom to a company that cares for the future of the planet can be very reassuring.
Running a company car scheme is also a great incentive to both attract new staff and to retain existing employees. It shows your employees that you have their interests in mind, nurturing a positive company culture.
By providing EVs for your employees, you are encouraging them to act in more environmentally friendly ways and consider their impact on the environment. This in turn means that they are more likely to get on board with any energy usage reduction initiatives you implement in the future.
Company car schemes are one of the most popular employee benefits, and for good reason. Pair this with the introduction of EV charger s for your business and you’re on to a winner!
If you want to introduce EVs to your business, you can get an EV installation quote with Yü Charge or find out more about the benefits of electric vehicles over on our EV News page.