HOW SAL SAC IS DRIVING EV UPTAKE
Alison Argall, Tusker’s business development director, talks to EV Fleet World about how salary sacrifice is contributing to the growth in sales of EVs.
What’s interest like in salary sacrifice at the moment and how much are company car tax changes driving uptake?
Interest is very strong, fuelled by the huge increase in moving to driving an electric car. More than 70% of Tusker deliveries in 2021 have been electric and our order book is predominantly for hybrid and electric cars. It enables drivers to get into an electric car very tax efficiently and to budget effectively as each car comes with the complete motoring package, including maintenance and insurance.
Around one third of drivers taking delivery of salary sacrifice cars are ex-company car or perk drivers while the rest are taking up a benefit-led car for the first time.
“More than 70% of Tusker deliveries in 2021 have been electric and our order book is predominantly for hybrid and electric cars.”
Is it just diesel drivers who are switching to salary sacrifice?
Many diesel drivers are now seeing the major impact of new Benefit-in-Kind taxation on their monthly earnings and are looking for alternative ways of retaining their mobility whilst reducing their tax. That is where salary sacrifice comes in.
We’ve seen an increase in engagement from 40% taxpayers compared to historical trends, which has pushed up the average P11D order price from £30k to £40k over the past 12 months.
This is having a very positive impact in driving down average CO2 emissions in this group of drivers. On average the 40% tax paying driver’s average CO2 figure has fallen from nearly 110g/km at the beginning of 2019, to just 40g/km at the end of 2020. It is helping contribute to the Government’s vision of a future zero emission car society.
When looking at the top 10 most popular salary sacrifice cars in 2019, just one EV made an appearance while in 2020 there were eight EVs and one hybrid. Higher-value cars from Audi, Mercedes and Tesla made it onto the list alongside Peugeot, Nissan and MG, with and take up has been strong across both 20% and 40% taxpayers.
Are more employees outside of traditional company car drivers becoming aware of the benefits of salary sacrifice?
Yes, they are. Where a company has introduced salary sacrifice to its staff, we have had a very strong take-up from both 20% and 40% taxpayers. Younger employees in particular are attracted to benefits when joining a new organisation, so having the right scheme in place can be the difference between recruiting a person or them joining another company.
Salary sacrifice gives almost every employee a chance to get into an EV very tax efficiently. There are few restrictions on which employees can benefit from salary sacrifice, in fact HMRC is keen for all eligible employees to have access and for it to be very inclusive. There are however age restrictions on certain cars based on insurance cover for some higher power cars, and Tusker works with employers to ensure employees only have access to the cars they can afford and are legally entitled to drive. This means companies are meeting their Duty of Care commitments as well as reducing their grey fleet and the challenges these types of cars and drivers can offer employers.
HMRC also does not stipulate a restriction of how many cars an employee can have on the scheme, instead it is down to the employer’s overall benefits framework and employee affordability.
How do you think future uptake of salary sacrifice will shape up? How will the 2030 ICE phase-out plans affect things? And what are your thoughts on the evolution of the wider company car market?
2020 and 2021 have been a major tipping point for salary sacrifice which has been fuelled by drivers wanting to get into an EV. We are getting more enquiries and more companies are introducing the scheme to all their employees, not just company car drivers. The speed of demand in salary sacrifice is matching the speed at which manufacturers are rolling out new EVs and the huge appetite from drivers behind the wheel of an electric car. Over 70% of orders at the end of 2020 were for EVs which has contributed to the growth of our salary sacrifice fleet.
We are seeing companies both big and small roll out the car benefit scheme, as they want to attract the best talent, retain current staff and just as importantly reduce their environmental footprint by getting more employees into low or zero emission cars.
Corporates are becoming aware that 2030 is not far away and are now starting the process of getting employees aware of and driving EVs. We are growing our internal teams to meet demand.
What we are seeing is companies operating a blended mix of contract hire and salary sacrifice. The contract hire scheme is still very much there to service the bread-and-butter company cars which travel high mileages. Running parallel is salary sacrifice which enables the rest of the employee base including perk drivers and cash allowance drivers to get into EV at the same time reducing their tax liability.
In terms of the traditional company car market we are seeing significant appetite to introduce a blend of fully electric and hybrid vehicles. The growth of EVs has certainly helped the evolution of the company car market and this looks set to continue to 2030 and beyond.