Services
Audit & Assurance
External, internal and joint venture audit services
Business Advisory
Management accounts, strategic planning, profit improvement, ESG
Corporate Finance
M&A advisory, selling a business, fundraising, valuations, due diligence
ESG
Baseline assessments, materiality assessments, carbon footprint and sustainability reporting
Hotel Accounting
Accounting function, automation, daily reconciliations and dashboards, accounts payable
Payroll & Employment
Payroll, global mobility, employee benefits, employment taxes
Private Clients & High Net Worth Individuals
Tax planning & compliance, tax residence and domicile, trust planning
Restructuring & Recovery
Business rescue, liquidations, administrations, insolvency, debt recovery
Tax
Corporate tax, customs duty, VAT, R&D, tax investigations, international tax
Virtual Finance
Bespoke service providing real-time information about your business performance
More from AAB
AAB PEOPLE
Full-service people consultancy – human resources, learning and development
AAB WEALTH
Financial planning, cash flow modelling, retirement planning
AAB Consulting
Business consultancy helping organisations with the challenge of change
Sectors
Business Services
Professional services, medical, recruitment and media
Construction & Property
Property developers, construction companies, housebuilders, landlords
Energy
Renewables, clean energy, energy producers, energy transition, exploration and production
Family Business
Specialist support for businesses owned/managed by families
Food & Drink
Food & drink producers, processors, importers, wholesalers and retailers
Industrial
Engineering, manufacturing, aerospace, automotive, shipping, distribution
Leisure, Retail and Hospitality
Fashion, entertainment, activity centres, hoteliers
Not For Profit
Charities, social housing, higher and further education institutions
Public Sector
Government, non-departmental public bodies, health boards, ALEOS
Technology
Software companies, tech start-ups, cybersecurity firms, and AI innovators.
About
AABout Us
Our story
Our Team
Meet the specialists
Careers
Join the AAB team
Diversity & Inclusion
Building a business where everyone feels they belong
Growing Sustainably - ESG
ESG – Our commitment to building a sustainable business
News
Latest news from across AAB Group
AABIE
AAB charitable initiative
AAB Wealth expands presence in Central Scotland with acquisition of Synergy Financial Planning
Insights
Blogs
Stay informed with cutting-edge news for business growth. Our experts offer industry insights and invaluable advice on accountancy and business strategies.
Case studies
Explore insightful case studies tailored to specific industries, offering invaluable lessons and strategies for success.
Webinars & Events
Engage with dynamic webinars and events tailored to your interests, offering valuable insights and networking opportunities.
ESG Diligence: The Key To Sustainable M&A Transactions
AAB / Blog / Is salary sacrifice worth it for an electric car?
BLOG4th Sep 2023
By Richard Petrie
or reach out to a member of our Payroll & Employment team.
The 2022 Benefit in Kind Statistics annual report shows there has been a significant shift from diesel company cars which accounted for around 80% pre 2017, to 60% by 2019/2020 with a further decline to just 49% (355,000) in 2020/21. However, in the same year, 7% of company cars (52,000) were reported as being fully electric. It will be interesting to see what the 2023 report shows when published; watch this space.
Obtaining an Electric Vehicle (EV) through a company car scheme will generate a Benefit in Kind (BIK) value of only 2%. The 2023 UK budget confirmed that rate will be frozen until 2025 and then rise by 1% increments for the following two years. Even at the rate of 4%, this will be considerably less than the old BIK value on EV’s that was 16% prior to April 2020.
The drive and willingness from the Government to encourage more EV schemes is clearly there, however this may not always be the case in future or as generous. The Guardian recently reported that charger installations are up 23% in the first 7 months of this year. There’s also been a rise in the amount of fast charging stations we’re seeing outside of London, across the UK. With the backing from the government and access to fast charging stations getting better, now is the time to consider getting an electric vehicle.
Prior to 2017 the salary sacrifice/exchange rules did permit company cars to be part of flexible benefit packages, whereby perhaps an employee would choose a car over earnings, resulting in less tax and National Insurance. However, post 2017 any new company car scheme (all schemes from 2021) would no longer be able to benefit from tax savings and instead the new Optional Remuneration Arrangements would apply. EVs were excluded from this change in legislation, meaning these company car schemes can be operated via salary sacrifice/flexible benefit package through their employer, and whilst employees will still pay some Benefit in Kind Tax, it will only be on 2% of the benefit charge and both the employee and employer can make savings on National Insurance Contributions.
More UK cities are considering introducing clear air zones and or emission charging zones and even some parts of the motorway system are lowering speed limits in sections, to reduce the environmental impact.
Richard Petrie, Corporate Benefits expert notes the top three reasons as to why employers are using EV schemes:
If for example, a car leasing company was used, they would usually supply the car and lease to the employer, who in turn offers it to employees. The employee would reduce their gross pay by the lease amount, to repay the employer and potentially benefit from tax and NICs savings. As mentioned above there will be some tax to pay, but if for example earnings were taxed at 40% or 42% (Scotland), then the company car BIK value of 2% is a minimal offset. The employer will benefit by not paying Class 1 National Insurance on the value of the lease amount.
Whilst these schemes can be extremely beneficial as previously outlined, it is important to understand all the facts prior to implementation, to ensure a successful and compliant scheme.
If you are interested in understanding more and or, require assistance with setting up such a scheme, please contact Richard Petrie, our employee benefits team, or your usual AAB contact.
How AAB can help you with
Accurate, efficient handling of payroll functions and employment tax are fundamental to your success. We help you get them right – easing your workload, ensuring compliance in the UK and globally, and keeping your employees satisfied. Our comprehensive services for payroll and employment taxes address all these issues and help you operate efficiently, confidently and compliantly. Whatever the size of your business, from start-up to global player, all the services you require from us will be tailored to your specific needs and integrated to provide seamless support.
Related services
Employee Benefits Senior Manager