July 28, 2023
Grants and incentives
Keeping up with the ever changing grants and incentives for EV owners and businesses can be an overwhelming task so we’ve put together a detailed rundown of the latest initiatives available in the UK.
Table of contents
Electric Car Schemes
Here's a detailed rundown of the latest initiatives available in the UK:
These incentives and grants aim to encourage the uptake of electric vehicles in the UK, and to support the government's commitment to reduce carbon emissions and air pollution.
What’s an EV salary sacrifice scheme?
An EV salary sacrifice scheme is an agreement between an employee and their employer, where the employee agrees to give up a portion of their salary in exchange for a non-cash benefit, such as an electric vehicle (EV). The employer then leases an electric vehicle on behalf of the employee, and the cost of the lease, including maintenance and insurance, is deducted from the employee's gross salary.
The relation of this scheme to Benefit-in-Kind (BIK) tax comes from the fact that the non-cash benefits, such as company cars, are considered as income and are therefore taxable. However, the BIK tax rate for electric vehicles is significantly lower compared to vehicles powered by traditional fuels.
This lower BIK tax rate makes electric vehicles an attractive option for both employees and employers. For employees, it can be a more cost-effective way to own an EV, as the cost of the lease is deducted from their gross salary, and it reduces the amount of tax they have to pay. For employers, offering EVs as part of a salary sacrifice scheme can help to reduce their National Insurance contributions, as these are based on the employee's reduced gross salary.
Below is a list of some of the companies out there currently offering salary sacrifice schemes:
No more Plug-in Car Grant (PICG)?
This grant provided a discount of up to £2,500 off the purchase of new low-emission vehicles which cost less than £35,000. As of 14 June 2022, this grant is no longer available to new EV drivers. There are currently no future plans to bring this grant back into play.