莲花直播

Written by Rob Buckland

Looking to lease an electric car through your company? You’re not alone, as business EV leasing has never been more popular. 

Why? Well, for starters, electric cars offer lower running costs, a great driving experience and boost your company’s eco-credentials. But there’s more than one way to do it, as we’ll explain.

Two of the most common and talked-about ways to lease an electric car through your business are through Salary Sacrifice, or Business Contract Hire (also known as BCH, or Business Leasing). There are pros and cons to both with some better suited to different types of employees. 

But what is the difference between and Salary Sacrifice? Which should you choose for leasing an EV? We’ll go into more detail in this guide.

Benefits of a Salary Sacrifice scheme

The concept of salary sacrifice is nothing new: the UK government describes it as an agreement to reduce an employee’s entitlement to cash pay, in exchange for a non-cash benefit. 

The main purpose of doing this is to save tax, because the value of the benefit is taken out of your pre-tax pay. A salary sacrifice electric car scheme such as 莲花直播 Leasey is a great option for many, particularly company employees, who save money on a brand new EV without introducing any additional cost to the business. 

Benefits of an include: 

• Income tax and NIC savings for employees: You can save up to 40% of the cost of electric car leasing through tax reductions, while also reducing your National Insurance Contributions.
• No upfront costs: Both the employer and employee pay nothing to sign up to the scheme, and there’s no deposit like personal car leasing.
• Maintenance, insurance and breakdown cover included:  You get ultimate peace-of-mind, with routine servicing and maintenance, plus cover in the event of a non-routine incident.
• Company NIC tax savings: The business itself also benefits by paying less in its employee National Insurance Contributions. 
• Brilliant staff perk: It’s a great way to attract top talent to your business, and retain existing employees.

Benefits of a Business Contract Hire (BCH) lease

Business Contract Hire (BCH) is another popular and beneficial way of leasing an electric car through your business. It works slightly differently to Salary Sacrifice, however. 

It’s mainly considered an employer benefit, and is a tax-efficient way of leasing a car primarily for business use. If your business has an annual turnover of £85,000 or more, Business Contract Hire gives you a 50% reduction in VAT costs and lower monthly payments. 

Benefits of Business Contract Hire include: 

• Low rates: You’ll pay the same BiK tax rate as you would leasing through Salary Sacrifice, which is just 2% for electric cars until April 2025.
• Enhanced business reputation: Being seen in the latest electric cars gives your company a professional image, and shows that you care about the environment.
• Low running costs: Electric car drivers save money on fuel, tax and maintenance costs, with fewer moving parts and less wear on items such as brakes.
• Flexibility to upgrade every few years: You’ll be able to upgrade to the latest EV technology when it arrives.

Scenarios where a Salary Sacrifice lease may be better

Anyone can benefit from leasing an EV through a Salary Sacrifice scheme, but those that stand to gain the most include:

• Employees of a business that’s already signed up to the Salary Sacrifice scheme.
• Employees that are paid mainly through salary rather than dividends - that’s usually most employees except company directors or key shareholders.
• Those that are looking for larger tax savings - the higher your income tax rate, the more you save.
• Individuals who primarily intend to use the car for personal purposes rather than business-related activities.
• Business owners that want to enhance their business fleet offering and reputation.
• Those seeking additional package benefits - these include insurance and breakdown cover, maintenance and servicing.

Conclusion

Both salary sacrifice leasing and business contract hire have advantages and disadvantages depending on your situation. 

In the simplest terms possible, most employees would benefit from being part of a salary sacrifice scheme, while employers, directors or shareholders should look at business contract hire. 

Check out this table for a summary of the positives and negatives of both schemes:

Before signing on the dotted line of any deal, it’s important to take some time and evaluate whether a salary sacrifice or business contract hire scheme is right for you. If you’re still unsure, it’s best to seek out guidance from a financial advisor, who can look at your specific situation and provide tailored recommendations to inform your decision.