At Happl, we're committed to supporting you to provide employees with benefits that make a difference. The Electric Vehicle (EV) Scheme, in partnership with The Electric Car Scheme, offers a cost-effective and sustainable way for employees to access and drive an electric vehicle. This guide is designed to offer a comprehensive overview of how the scheme works and how you can get started through Happl.
What is the EV Scheme?
The EV Scheme is a salary sacrifice program that makes electric cars more affordable for employees. By leasing an electric car through the scheme, employees can save 30-60% on their monthly car costs due to tax efficiencies. This benefit helps promote a sustainable future while offering employees a valuable perk.
How Does Salary Sacrifice Work?
Lease Agreement: The employer leases an electric vehicle for the employee.
Salary Deduction: Employees agree to sacrifice a portion of their gross salary in exchange for the car.
Tax Savings: The sacrificed salary is not taxable, resulting in significant savings on Income Tax and National Insurance for employees.
For example, a higher-rate taxpayer leasing a Kia e-Niro 2 could see their monthly costs reduced from £520 to just £317 with tax savings
Why Choose the EV Scheme through Happl?
Complete Risk Protection: We partner with The Electric Car scheme. Their scheme includes comprehensive risk protection, covering unexpected situations like employee resignation, redundancy, or long-term sickness.
Best Prices on the Market: The Electric Car Scheme partners with top leasing companies to ensure employees get the best prices available on the market, with monthly reviews to stay competitive.
All-Inclusive Packages: Leasing an EV through the scheme bundles everything your employees need with the car into a simple, all-inclusive and cost effective package.
Net Zero Cost to Employers: The scheme is designed to operate at no cost to the employer, balancing the costs of lease payments with tax savings and VAT recovery.
How the EV Scheme Benefits Employers
Offering the EV Scheme through The Electric Car Scheme and Happl provides several benefits for employers:
1. Cost-Neutral Offering
Zero Net Cost: The scheme is designed to be cost-neutral for employers. While employers cover the lease payments, these costs are balanced by savings in Employer National Insurance Contributions and VAT recovery on lease costs.
Tax Savings: Employers benefit from a reduction in Employer National Insurance Contributions due to the reduced gross salary of employees who participate in the scheme.
2. Support Sustainability Goals
Corporate Responsibility: By promoting the use of electric vehicles, employers can actively contribute to their corporate sustainability and environmental goals, aligning with broader efforts to achieve Net Zero emissions.
Scope 3 Emissions: The scheme provides annual reports on the impact of EV adoption, including reductions in Scope 3 carbon emissions, helping employers to measure and communicate their environmental impact.
3. Enhanced Employee Benefits Package
Attract and Retain Talent: Offering an electric car scheme as a benefit enhances your company's benefits package, making it more attractive to current and prospective employees.
Promote Well-being: Employees gain access to affordable, clean transport options, which can contribute to their overall well-being and satisfaction.
4. Complete Risk Protection
Safeguard Against Unexpected Costs: The Electric Car Scheme's Complete Risk Protection covers employers against early termination fees due to employee resignation, redundancy, long-term sickness, and other unforeseen circumstances.
Peace of Mind: Employers can offer this benefit without the risk of incurring unexpected costs, ensuring a smooth experience for both the company and employees.
5. Simplified Administration
Easy Onboarding and Management: The scheme provides an employer portal and dedicated account management, as well as all of the usual support you'd receive from Happl, streamlining the process of onboarding and managing the benefit.
Straightforward Reporting: Support is provided for all necessary payroll and HMRC reporting, including BIK, NIC, and VAT calculations, making the administration of the scheme simple and efficient.
How the EV Scheme Benefits Employees
Significant Cost Savings: By participating in the EV Scheme, employees can save thousands on their electric vehicle costs over the lease term.
Comprehensive Protection: The scheme includes a complete risk protection service, safeguarding both the employee and employer against unexpected changes, such as resignation or family leave.
Convenience and Peace of Mind: The all-inclusive package covers maintenance, insurance, and breakdown cover, so employees have a seamless and worry-free EV experience.
Compliance with HMRC Regulations
The Electric Car Scheme, is fully compliant with HMRC regulations. Here's how the scheme aligns with HMRC rules:
1. Salary Sacrifice and Tax Efficiency
HMRC Guidelines: The salary sacrifice arrangement is structured to comply with HMRC's rules on salary sacrifice schemes. Employees agree to give up a portion of their pre-tax salary in exchange for the benefit of leasing an electric car. This reduces the employee's gross pay, resulting in lower Income Tax and National Insurance Contributions (NICs).
Benefit-in-Kind (BIK) Tax: Electric cars are subject to a very low Benefit-in-Kind (BIK) tax rate, set at just 2% until at least 2028. The low BIK rate means employees pay significantly less tax compared to traditional company cars, enhancing the cost-effectiveness of the scheme.
2. HMRC Notifications and Reporting
P46 (Car) and P11D: The scheme provides straightforward reporting tools to ensure compliance with HMRC reporting requirements. This includes assistance with P46 (Car) forms, which must be submitted when employees receive or give up a company car, and P11D forms, which report the value of benefits provided to employees.
Annual Reporting: The Electric Car Scheme includes comprehensive support for annual reporting, including BIK, NIC, and VAT calculations, ensuring that all necessary details are accurately reported to HMRC.
3. VAT Recovery
VAT on Lease Costs: Employers can reclaim 50% of the VAT on the monthly lease payments for electric vehicles, in line with HMRC rules on car leasing. For the maintenance component of the lease, the VAT recovery rate is 100%. This VAT recovery contributes to making the scheme cost-neutral for employers.
4. Income Tax and National Insurance Savings
Tax-Efficient Structure: By reducing the employee's gross salary through salary sacrifice, the scheme allows both the employer and employee to benefit from NIC savings. Employees pay less Income Tax and NICs, while employers benefit from reduced Employer National Insurance Contributions. The tax savings are in compliance with HMRC guidelines for salary sacrifice arrangements.
5. Benefit-in-Kind (BIK) Rates for Electric Vehicles
Low BIK Rates: Electric vehicles attract a significantly lower BIK tax rate compared to traditional petrol or diesel vehicles. The BIK rate for electric cars is set at 2% until at least the 2027/2028 tax year. This rate is reviewed and published annually by HMRC, ensuring that the scheme remains in line with government incentives to promote electric vehicle adoption.
6. Compliance and Peace of Mind
Scheme Structure: The Electric Car Scheme is designed to ensure compliance with all relevant HMRC regulations, providing peace of mind to employers. The partnership with The Electric Car Scheme ensures that all aspects of the benefit are managed in accordance with current tax laws and guidance.
Professional Support: The scheme provides employers with dedicated support, including guidance on HMRC compliance and reporting requirements, simplifying the implementation and management of the scheme.
Onboarding Process Through Happl
Step 1: Let Happl know you're interested in the scheme
Internal Review: It might be worth conducting an internal review to see if this is something your employees would be interested in, as well as discussing with finance.
Let us know you're interested: Reach out to your dedicated Happl Account Manager or head the Benefits Hub to register your interest
Step 2: Portal Setup & Services Agreement
Portal Access: Happl will work with The Electric Car scheme to set up your access to secure employer portal.
Agreement: Sign the Services Agreement to formalise the scheme setup.
Credit Check: For lease agreements, a credit check will be conducted by The Electric Car Scheme to ensure financial eligibility.
Step 3: Launch the Scheme
Employee Engagement: Happl and The Electric Car Scheme will support your team with webinars, welcome emails, and one-on-one employee support if required.
Personalised Quotes: Employees can receive personalised quotes directly through the portal, making it easy for them to explore their options.
Ongoing Support: Dedicated EV specialists are available to help employees choose the right car and guide them through the leasing process.
FAQs
What happens if an employee leaves? If an employee leaves or can no longer participate in the scheme, early termination fees are usually covered under the Complete Risk Protection. The Electric Car Scheme protects employers from unexpected costs in most circumstances.
Is there a minimum commitment period? The scheme typically involves a 3-year lease agreement, though flexible terms and subscription options are available, including 1-year terms or temporary vehicles while waiting for delivery.
How do employees get started? Employees can get personalised quotes and explore their options through the portal set up during the onboarding process. Happl and The Electric Car Scheme will provide support and guidance throughout the process.