The car buying trick that could save you hundreds per month on an EV

Company car buyers could save thousands of pounds a year on their next car if they go electric, following changes to UK tax rates.

Many drivers have been put off switching to an EV by their relatively high list prices but changes to how benefit in kind tax is calculated, along with a little-known purchasing option could put EVs on a level with traditional petrol and diesel cars.

By using a salary sacrifice scheme to obtain a company car motorists could save an average of £320 a month through tax and National Insurance savings along with the lower running costs of an EV.

The sudden savings have come about because of changes to the benefit in kind (BIK) tax calculations, made to help encourage the uptake of zero-emissions vehicles. Since the start of April, BIK on EVs has dropped from 16 per cent to zero, bringing immediate savings for buyers.

By combining those savings with buying through a pre-tax salary sacrifice programme it is estimated drivers could save between £7,000 and £11,000 over three years.

How it works

Salary sacrifice works by employees giving up a portion of their gross earnings to pay for their company car. By reducing their pre-tax income this helps reduce the amount of tax and National Insurance they pay and the latest BIK rates mean they pay no additional tax on the amount sacrificed.