Wage Inflation? Save thousands per employee using EVs!

Inflation is back, & it’s back in big way. In the Spring Statement yesterday (23 March 2022) Rishi Sunak said that inflation is expected to hit 8.7% in Q4 of 2022 & average 7.4%. Plus National Insurance will increase by 1.25% for both employees & employers in April

Cost of living if under massive pressure & this will understandably lead to expectation that employers increase salaries to protect employee standard of living. Combine this situation with the ‘seller’s market’ that currently exist for talented candidates looking for new jobs in the UK & wage rises could be an enormous cost impact for many companies

So, if there was a way of giving employees an attractive tax efficient benefit instead of a pay rise that worked financially for them & saved the employer thousands, with the added benefit of burnishing the employer’s ESG & Sustainability credentials, everyone would be doing it – right?

Well wrong. But they could, & arguably should, be

Electric Cars only attract 2% Benefit in Kind, so are a cost, tax & Employer NI efficient way of increasing the total reward package of an employee

Four examples to demonstrate:

Middle Manager earning £50k, 5% pension & 3% employer pension, with 10% bonus. An 8% pay rise cost the employer £5,724 & the employee only takes home £2,362 more (less than £200 a month). Or by giving the employee an MG5 Estate instead of the pay rise the employee’s take home only drops by £118 (less than £10 a month) & it costs the employer only £3,539 per annum. So the employee gets a fully funded car with 10k miles p.a. including maintenance for about £200 a month in take home pay & the employer saves £2,195 versus the pay rise

Senior Manager earning £75k, 8% pension & 5% employer pension, with 20% bonus. An 8% pay rise cost the employer £8,644 & the employee only takes home £3,510 more (less than £300 a month). Give the employee a VW ID.4 (318 mile WLTP range) instead of the pay rise the employee’s take home only drops by £337 (£28 a month) & it costs the employer only £6,309 per annum. So the employee gets a fully funded car with 10k miles p.a. including maintenance for about £320 a month in take home pay & the employer saves £2,335 versus the pay rise

An MD on £160k. Give them a BMWiX3 & save around £13k versus the pay rise

And what about a median salary employee on £27,500. Well, if you just swapped the pay rise for a VW e-Up it wouldn’t be a saving, but would only cost the employer £265 a year more. So a £20 a month salary sacrifice would make it stack up for the employer & the employee now has an EV for effectively £144 a month take-home

Given employers increasingly have to report Scope 3 emissions including commuting (for example under PPN06/21 for Government suppliers) it helps here too!

Being sustainable saves money too. Contact me to find out more by emailing simon@participation.co.uk or using one of the "Contact" buttons on the website

Keep KISSing Sustainability.  Simon xx