Octopus launches new leasing company for electric car salary sacrifice

Octopus launches new leasing company for electric car salary sacrifice

Octopus Electric Vehicles today announces the launch of a new leasing service – Electric Dreams – offering 100% electric salary sacrifice schemes, to save employees thousands as they switch to clean green driving.

Similar to the popular cycle-to-work scheme, employers can give their staff a highly valuable benefit that is also good for the planet. Drivers already signed up are saving an average of £14,445 over three years, by sacrificing some pre-tax salary in return for a brand new electric car.

The benefit is made possible due to incredibly low Benefit in Kind (BiK) tax rates on electric cars, which is just 1% for tax year 2021-22, and 2% for the three years following. 

Octopus has designed its scheme to be low effort and zero cost for a business to set up. From launch, Octopus experts are available to help employees choose their cars and get set up with charge points and EV energy tariffs; as well as support the business with scheme documents, approvals and payroll. 

Fiona Howarth, CEO of Octopus Electric Vehicles, said: “Businesses and employees across the UK are searching for ways to do their bit for the environment. We have seen a seven-fold jump in salary sacrifice enquiries in the last year. If businesses in the UK introduce a scheme like this, they have the power to significantly reduce transport emissions across the UK by 2030.”

Businesses of all sizes are eligible for the Octopus Electric Vehicles scheme, in contrast to some schemes which are only available to large employers. Drivers can choose from a Porsche to a Renault, a Jaguar to a KIA, a Polestar or even a Tesla Model S.

Partners including Close Brothers and Lloyd Latchford will provide Octopus with financing and insurance services respectively. Octopus will provide customer service for both the businesses and employees

Drivers ordering before July will get a smart home charge point installed for free. And those with Octopus Energy will receive enough free renewable energy to drive 8,000 miles, enough to power the average UK driver for a year.

How Electric Dreams works:

• In return for a single monthly sacrifice tax-free from their gross salary, each employee who orders an EV will benefit from:

• A fully insured and maintained EV

• Access to EV Specialists to help them through their journey

• Zero deposit or upfront costs

• Additional government and council incentives including grants and waived congestion fees 

• 90% lower ‘fuel’ costs vs petrol or diesel cars

• If ordering before July, drivers will also receive a free smart home charge point, fully installed by the Octopus Energy Services team.

• If taking home energy from Octopus Energy, drivers also receive enough free renewable electricity to drive 8,000 miles – equivalent to the average UK driver’s mileage for an entire year.

About Salary Sacrifice:

• On April 6 2020, the UK government eliminated the Benefit in Kind (BIK) tax for drivers using an EV, instantly making leasing an EV through workplace salary sacrifice schemes incredibly attractive. Previously, 16% BIK tax was applied to the vehicle and by comparison, combustion vehicles are still subject to an average of 27% BIK tax when using salary sacrifice, making them far less financially attractive.

• Salary sacrifice is the same system employees use for cycle to work schemes, enabling them to pay from their gross salary, saving on both national insurance and income tax. Combining salary sacrifice and 0% BIK typically cuts monthly leasing payments by 30-40%. From today, BIK for EVs increases to a still negligible 1%.

• By comparison, combustion vehicles are still subject to an average of 27% BIK tax when using salary sacrifice. 

Octopus Electric Vehicles, part of the Octopus Energy Group, was launched in 2018 to offer a dedicated electric vehicle (EV) leasing service to grow the market share of electric vehicles and accelerate the UK’s transition to zero emission mobility.

Offering an all-in-one service, Octopus Electric Vehicles’ team helps drivers to select the right car, offers charge point installations and provides electricity tariffs designed for EV drivers. The company’s Electric Dreams service is a salary sacrifice scheme that helps businesses, workplaces and employees to go electric EVs in the most tax-efficient manner. Drivers typically save between 30-40% on monthly leasing payments, and even up to 60% in some cases. The scheme is a zero-cost and risk free perk to employers, with just 15 minutes of admin per month for every 10 employees signed up.