Electric Vehicles and the growth in salary sacrifice
What is Salary Sacrifice?
Put simply, salary sacrifice is a system whereby an employee will forgo some of their gross salary and in return, they receive a benefit. You may already be familiar with other salary sacrifice schemes, for example things like cycle to work schemes. With the help of a salary sacrifice scheme, employees can lease an Electric Vehicle (EV) and therefore save a significant amount on the monthly cost - up to 40% in fact. The saving is generated through reductions in national insurance and income tax payments. With HM Revenue and Customs (HMRC) committing to cap benefit in kind to 2% until 2025, Salary Sacrifice offers businesses a way of improving their green credentials, by reducing their carbon footprint in both business and personal miles of employees participating in such schemes.
There are considerations for businesses which includes scenarios such as what happens if an employee participating in such a scheme chooses to resign. Salary sacrifice schemes are based on a leasing arrangement, and these are not designed to be terminated without penal charges applying. In Salary Sacrifice schemes this will be 40 or 50% of the outstanding rentals. Typical rental periods will be between 36 and 48 months. It is therefore important that businesses consider either reserving in their P&L for these types of exposures or investing in Early Termination Insurance (ETI).
Jackson Lee Underwriting offers ETI solutions that not only cover risks such as resignation but can extend to include, loss of licence on medical grounds, long term sickness, adoption, maternity and paternity leave, expatriation, and accidental death. Backed by A rated insurer security our ETI solutions offer flexible cover at competitive premiums.