Company Car Tax and Salary Sacrifice

5. ledna 2023

From Company car Benefit-in-Kind (BiK) tax to Vehicle Excise Duty (VED), it’s important to know that the type of vehicle that you choose can have a big impact on your budget. With this in mind, we take a look at the tax advantages that all-electric vehicles offer over their petrol and diesel counterparts, and the reasons why they can be a compelling and cost-effective choice for salary sacrifice.

Find the most tax-efficient car for your needs

Benefit-in-Kind (BiK) is based on a car’s P11D value and WLTP CO2 emissions – so pure electric and plug-in hybrid vehicles can be a rewarding choice for drivers. For instance, drivers of zero-emissions cars, such as the models within our ŠKODA ENYAQ iV range are eligible for a BiK rate of just 2% of their list price until the end of April 2025.

From the 2025-26 tax year, BiK will increase by 1% year-on-year for three years. This means pure electric vehicles will have:

  • 3% BiK in 2025-26
  • 4% BiK in 2026-27
  • 5% BiK in 2027-28

Zero-emission cars are also exempt from Vehicle Excise Duty (VED) until April 2025, when they will be subject to a £165 annual charge.

To quickly find out how much tax you will need to pay, you can use our company car tax calculator.

This attractive BiK regime means that fully electric cars make an ideal choice for salary sacrifice - for both the employee and the employer. In fact, it’s one of the most affordable ways to drive a brand-new, fully insured and maintained electric car.

Because the monthly payment – the salary sacrificed – is taken from gross pre-tax salary, drivers will benefit from income tax and National Insurance relief whilst businesses can lower tax liabilities through reduced National Insurance Contribution (NIC) payments. Additionally, servicing, maintenance, insurance and breakdown cover are usually included in the monthly payment.

Furthermore, with a ŠKODA Powerpass card that gives you access to a wide range of public charging nationally, ENYAQ iV range customers can take advantage of subsidised packages for the first twelve months of ownership. You can view all the packages here.

Greater peace of mind

As well as helping you move to electric vehicles, getting your grey fleet drivers into brand new, regularly serviced and fully maintained cars via salary sacrifice can provide extra peace of mind that staff are driving safe and reliable vehicles. Moreover, salary sacrifice can be a great benefit for your staff, which according to Tusker, can serve as a “great staff perk which will attract and retain top talent.”

To find out more about the benefits of salary sacrifice or if you’d like to know if electric vehicles are right for your business, speak to a member of our ŠKODA Fleet team today.


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