Electric cars ease cost of living pressures for employees

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THE take home salary boost available to employees who are able to switch from a petrol or diesel to an electric company car could help counteract cost of living pressures for them, Arval UK said.

Joel Lund, who was appointed as Commercial Director in March, said that for a 20% tax payer with access to an electric vehicle (EV) via a company car scheme, the saving in benefit in kind tax tended to be between £1,000 – £2,000 per annum, which was important while the cost of living was rising at pace.

He said: “Very low benefit in kind and the resultant lower tax deduction, has been a key factor in electric car adoption from the moment that it became available, but it has become even more decisive in the last few months. At a time when prices of ordinary goods and fuel are visibly rising by the month, a take home pay increase of this kind has genuine value.

“Of course, the savings don’t just stop with tax. The cost of personal mileage for an EV driver is currently reduced compared to someone driving an internal combustion engine (ICE) equivalent, which can easily run into hundreds of pounds every year for an average motorist.

“What we are seeing is both individual drivers and entire fleets, which may have been slow when it came to electrification, suddenly find impetus, which very much fits in with our stated corporate strategy of supporting our customers’ transition to electrified vehicles as soon as possible. And by employers enabling more employees to access electric cars through salary sacrifice, it’s also a more inclusive approach for all employees.”

Lund said that Arval UK had been successful at securing EV supply of several major models and was currently registering percentages of electric cars and vans far in advance of the SMMT’s “true fleet” figures, meaning that drivers could access benefit in kind savings relatively quickly.

“In some categories, we’re almost 60% ahead of the SMMT’s reported overall fleet market in April when it comes to EV registrations, which very much illustrates that our supply strategy is working for customers who are keen to transition to electrification as soon as possible.”

A key tactical point had been advising fleets to open up their choice lists when it came to EVs, so that they can make the most of the available supply, he added.

“At the prestige end of the market, which may be reserved for directors or senior staff, manufacturers generally have been able to offer more EV choices, but in the lower grades, the selection of models has been relatively limited.

“But by relaxing choice lists, we are seeing some manufacturers make inroads into the fleet sector who have not necessarily been part of the core company car market in the past, but are now able to provide strong EV models with comparatively good supply.”

Lund joined Arval UK in 2008 as Head of Corporate Sales and has more than a quarter of a century of experience in the leasing sector. From 2019 to 2022, as Global Operations Director, he was involved in securing group investment to support UK customers as well as setting benchmarks for use on an international basis. He became Commercial Director two months ago, taking on responsibility for all Arval UK commercial activities including corporate, retail and partner sales channels.