Vehicle leasing and management firm, Rivervale, is reporting an uptick in battery electric vehicle (BEV) leasing, driven in part by salary sacrifice schemes that offer tax benefits to businesses and employees.

South East accountants Carpenter Box believe that part of this increase can be attributed to the tax benefits for businesses offering BEVs to their people as part of a salary sacrifice scheme. This reduces NICs for employers while enabling employees to access a benefit in kind (BIK) tax rate of just 3%, whereas conventional fossil fuelled cars attract a rate of up to 37%.

And the recently announced government grant for EV manufacturers, which could save UK households up to £3,750 when they upgrade or switch to electric, is expected to further accelerate EV uptake.

Chris Reeves, Partner and Head of Motor Retail at Carpenter Box accountants, added: “There are lots of moving parts at play that can explain the upward trend in BEVs, such as improving battery range and environmental considerations, but the financial benefits for both companies and individuals via salary sacrifice schemes and the newly announced Electric Car Grant will likely be key influencing factors.

“Employers benefit from a reduction in NIC, and potentially a VAT saving, both of which are important considerations given the rising costs of employment. Such schemes also underline a company’s commitment to reducing their carbon footprint.”

Businesses can also benefit from significant savings in VAT. This is because vehicle lease payments are subject to the standard VAT rate of 20%, but employers can generally recover 50% of the VAT, regardless of how much the vehicle is used for private purposes.

Says Chris Reeves: “For all these reasons, salary sacrifice schemes, whether for electric vehicles or other qualifying benefits, should be given careful consideration as a way of mitigating rising employment costs while providing a valuable reward for employees.”

Rivervale provides leasing, purchasing and vehicle management services in Sussex, and says demand for such schemes is growing because they provide a valuable reward for staff.

Vince Pemberton, CEO of Rivervale, commented: “We’re seeing a real surge in demand for car salary sacrifice schemes as organisations look for cost-effective, sustainable ways to reward their people. Employers tell us they love the scheme because it helps them attract and retain talent while giving staff access to brand-new, zero-emission vehicles at a fraction of the usual cost.”

This trend is reflected in part in the latest SMMT (Society of Motor Manufacturers and Traders) figures, which show BEVs now represent a fifth (21.3%) of all new cars joining UK roads.