Some key legislation to help you understand the benefits of the salary sacrifice car schemes:
– From April 2017 ultra-low emission vehicles were able to be included in a salary sacrifice scheme whereby the reduction in salary was taken on gross pay. This meant the real cost of income tax and national insurance to the employee was reduced, and driving a new electric vehicle became more cost-effective.
– Ultra-low emission vehicles are exempt from paying road tax.
– From April 2020, for electric cars, the Benefit-in-Kind (BIK) rate is 0% for the 2020/21 financial year. The rate will rise to just 1% in 2021-22 and 2% in 2022-23. This will be capped until the end of the 2024/25 tax year.