AFTER years of decline, salary sacrifice as a means of funding a new car is coming back, driven by a demand for electric vehicles supported by generous government incentives.
According to the BVRLA’s latest leasing report, covering Q3 2020, the latest quarter tracking salary sacrifice as a method of funding shows a significant slowing of a year-on-year decline since Q1 2017.
Salary sacrifice allows all eligible employees to drive a new BEV at an attractive inclusive monthly cost compared to a petrol or diesel equivalent. Employees’ ability to choose BEVs through company car schemes has given them options to gain access to green vehicle mobility that a cash allowance often struggles to match.
Zenith, the UK’s largest independent leasing company, is reporting a record growth in salary sacrifice car scheme orders from the rising demand for battery electric vehicles (BEVs).
In 2020, almost 60% of Zenith’s salary sacrifice orders were for BEVs. During the past 12 months, some of Zenith’s customers have achieved the largest number of orders since the launch of their schemes and an influx of employees who take a cash allowance.
In one scheme that launched this year, 85% of orders have been for BEVs, with the remaining 15% for plug-in hybrid electric vehicles. It will lead to an average saving of 372 tonnes of carbon for each year the vehicles are on the road.
Jon Smith, relationship director at Zenith, said the move to BEVs was due to several factors, including lower mileages driven now and anticipated into the future, lower BiK and companies seeking to reduce their carbon emissions on their roadmap towards carbon neutrality.
“The pandemic has meant that many companies are reviewing their car policies to ensure that they are fit for purpose for the next decade. It has also proven to be a strong force for positive change, with some clear trends emerging.
“For some of our customers, removing limits on BEVs that an employee can choose within a scheme if they make a private use contribution has meant BEV ordering has materially overtaken normal ICE vehicles. The adoption has many benefits, including generating a BiK saving for the individual and an environmental benefit for the company.
“Looking forward, the range of BEVs is growing rapidly, and there are positive steps in expanding the charging infrastructure in the UK. Companies understand the benefits of company car schemes and now have more options than ever before in providing a vehicle from flexible leasing to salary sacrifice schemes.”