1. What is Electric Car Salary Sacrifice?

Electric Car Salary Sacrifice is a UK scheme where employees give up part of their salary in exchange for a company car (typically electric). This arrangement can provide tax and National Insurance savings for both employees and employers.

2. How Does the Calculator Work?

The calculator uses the salary sacrifice formula:

Where:

• \( EV\ Sacrifice\ Amount \) — The amount of salary sacrificed (GBP)
• \( Tax\ Rate \) — Your income tax rate (decimal, e.g., 0.20 for 20%)
• \( NI\ Rate \) — Your National Insurance rate (decimal, e.g., 0.12 for 12%)
• \( BIK\ Tax \) — Benefit-in-Kind tax (typically 2% for electric vehicles)

Explanation: The calculation shows the net savings after accounting for reduced tax/NI payments and the BIK tax you'll need to pay.

3. Importance of Salary Sacrifice Calculation

Details: Understanding potential savings helps employees make informed decisions about whether salary sacrifice schemes are beneficial for their personal financial situation.

4. Using the Calculator

Tips: Enter your salary sacrifice amount, tax rate, NI rate, and BIK tax percentage. For most electric vehicles, the BIK rate is 2%. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Who benefits from electric car salary sacrifice?
A: Both employees (through tax/NI savings) and employers (through reduced NI contributions) can benefit, though individual circumstances vary.

Q2: What's the typical BIK rate for electric cars?
A: Currently 2% in the UK, though this may change in future tax years.

Q3: Are there any risks to salary sacrifice?
A: It may affect pension contributions, mortgage applications, and other salary-based calculations.

Q4: Can I leave the scheme early?
A: Early termination may incur fees - check your specific scheme's terms.

Q5: Is there a minimum salary requirement?
A: Most schemes require your reduced salary to stay above National Minimum Wage.