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UK News Octopus launches new electric car 'salary sacrifice' scheme

12:30  08 april  2021
12:30  08 april  2021 Source:   dailymail.co.uk

Octopus Energy launches electric car leasing scheme

  Octopus Energy launches electric car leasing scheme Green energy company Octopus Energy has branched out with EV leasing for drivers. Here’s what you need to know.The company has offered EV-specific energy tariffs for consumers and businesses for a number of years to help drivers to save money when recharging. Fiona Howarth, CEO of Octopus Energy’s electric vehicle offshoot, told Motoring Research the addition of a leasing scheme will make Octopus a one-stop shop for electric car drivers.

We are Octopus Electric Vehicles Limited, with registered company number 10754317 and registered address at 33 Holborn London EC1 2HT. We trade from UK House, 2nd floor, 164-182 Oxford Street, London W1D 1NN so are best contacted at that address. We have appointed a data protection officer, Lynne Higgins, who Due to the popularity of our salary sacrifice scheme , we're sadly unable to take on new customers right now - as we ensure our existing customers get great service as they launch their schemes . But do not worry - you can join our VIP waiting list for our relaunch in the new year.

Octopus Electric Vehicles is launching a new leasing service – Electric Dreams – offering electric salary sacrifice schemes . 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 . Octopus has designed their 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.

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Octopus Electric Vehicles has revealed a new 100 per cent electric car leasing service for businesses looking to become more environmentally friendly.

The scheme, called Electric Dreams, uses a system known as 'salary sacrifice' which allows staff to pay for a new electric vehicle out of their gross salary, potentially saving them thousands of pounds on national insurance and income tax.

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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

Octopus Electric Vehicles - home of electric vehicle leasing for personal or business, and the electric car bundle, including charging and cheap renewable electricity to help you on your journey to electric . We are Octopus Electric Vehicles Limited, with registered company number 10754317 and registered address at 33 Holborn London EC1 2HT. We trade from UK House, 2nd floor, 164-182 Oxford Street, London W1D 1NN so are best contacted at that address. We have appointed a data protection officer, Lynne Higgins, who is responsible for overseeing questions in relation to this

The firm said it is introducing the programme in response to a surge in interest in electric vehicles from businesses.

Huel and Purplebricks are two large firms who have already signed-up, with more than a hundred new enquiries every week according to Octopus, which had Prime Minister Boris Johnson visit its London headquarters late last year.

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Dubbed Electric Dreams, the electric vehicle (EV) leasing company is claiming an average of £14,445 over three years is being saved by drivers already signed up. This is achieved by those drivers sacrificing some pre-tax salary in return for a new electric car , taking advantage of the current low Benefit in Already, salary sacrifice is used for cycle to work schemes , enabling employees to pay from their gross salary , saving on both national insurance and income tax. Electric Dreams comes off the back of a number of other services launched by Octopus Electric Vehicles , including its Electric

Buying an electric car through an electric car salary sacrifice scheme can help you save some big bucks. There are some great advantages to the electric car salary sacrifice . Employees get: - Brand new electric cars which are otherwise expensive - Income tax and National insurance contributions savings - Substantially lower cost of car ownership - Savings on fuel costs - Fixed, tax-free payments - Ease and convenience of setting-up the scheme with the help of the company - No initial upfront costs - Low BiK rates compared to petrol/ diesel cars - Getting ready ahead of 2030 diesel

a close up of a car: New: Octopus Electric Vehicles has launched a new salary sacrifice scheme for businesses © Provided by This Is Money New: Octopus Electric Vehicles has launched a new salary sacrifice scheme for businesses

The launch comes as EVs reach a tipping point thanks to falling cost, government incentives and changing attitudes towards zero emission vehicles.

Octopus has been providing salary sacrifice for the last year but only as a broker for other leasing companies.

But it is now its own dedicated leasing company, meaning it will own the vehicles themselves.

This is Money takes a look at Octopus Electric Vehicles' new programme and explains exactly how salary sacrifice schemes work.

What is a salary sacrifice scheme?

Essentially, salary sacrifice means employees agree to give up part of their salary in exchange for a benefit, in this instance the benefit is a 'green' car.

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Salary sacrifice is a game-changer. By paying for your EV lease directly through your pay check you can effectively chop off up to half of your monthly motoring costs compared to a personal lease. Easy peasy. And it’s not just for top execs. You can roll out a Salary Sacrifice scheme as a benefit to all your employees so everyone can enjoy an electric car and We are the Salary Sacrifice experts. We've got a dedicated team who can talk you through it, calculate your bespoke savings and even get it set up within your business. So give us a call on 020 8012 8190 or drop us a note and let’s get cracking.

What is salary sacrifice for electric cars ? We go into detail about the ins and outs of EV salary sacrifice , including the benefits for employees, businesses and the environment. An electric vehicle salary sacrifice scheme lets an employee pay for an electric car each month using their gross salary – that’s before tax and other contributions are deducted. It’s the same as other salary sacrifice schemes , such as childcare, cycle to work schemes or pension contributions.

There are already many similar cycle to work schemes in place where workplaces provide their employees with bikes to get to and from their office.

Employees will pay a fixed monthly cost for the vehicle which is made using their gross salary which is their income before tax or net salary plus their national insurance and income tax.

Employers will first rent an electric car from a supplier with the employee then given the option to rent this car in exchange for a part of their salary.

The will usually be maintained by a third party chosen by the company if it opts for a fully maintained contract which typically includes routine services, repairs and MOT tests.

a car parked in a parking lot: Tesla Model 3's are the most popular car to get through Octopus' salary sacrifice scheme © Provided by This Is Money Tesla Model 3's are the most popular car to get through Octopus' salary sacrifice scheme

How will Electric Dreams work?

Electric Dreams aims to support the growing number of employees looking to go electric using salary sacrifice which could ultimately help them save thousands of pounds on both national insurance and income tax.

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Octopus Electric Vehicles' new scheme gives employees access to every EV on the market with a range of over 100 miles – of which there are over thirty, up from just five in 2017. A further 20 more models will be available later in 2021.

It is available to all businesses – particularly those with fewer than 1,000 employees which may struggle to access similar schemes.

It provides everything businesses and employees need to go electric in one place – including EVs, home and workplace chargers, smart energy tariffs to keep bills low, and impartial expert advice on going electric.

Drivers that order an EV through Electric Dreams before July 2021 also receive a free smart charger fully installed by the Octopus Energy Services team.

In addition, 8,000 free miles of green electricity with home energy from Octopus Energy – enough for an average UK driver to drive for free for a year.

Octopus Electric Vehicles continues to offer business contract hire leasing packages as a broker.


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One of the reasons Octopus has decided to start the scheme now is thanks to the low company car tax rates on EVs which can make them a hugely beneficial option for those looking to help the environment.

Full electric cars are exempt from Vehicle Excise Duty but drivers still have to pay Benefit-in-Kind tax if you are going to run one as a company car.

However, for the 2020 to 2021 financial year, the BiK rate for zero-emissions company cars was just 0 per cent meaning there was nothing to pay until this month, at which point it goes up to just one per cent.

It will rise to 2 per cent over the next three years. By comparison, combustion vehicles are subject to a typical BIK tax of 25 to 35 per cent.

a bicycle is parked next to a car: There has been a surge in demand for EVs as people become more environmentally conscious © Provided by This Is Money There has been a surge in demand for EVs as people become more environmentally conscious

How many people are taking advantage of the scheme?

So far, 141 companies have signed up to salary sacrifice with Octopus, making it available to 22,298 employees.

Some 15 companies are already live on the scheme, including Huel and Purplebricks, making it available to 1,491 employees across the UK.

At present, the most popular car ordered is the Tesla Model 3, which was also the fourth best-selling new passenger vehicle in March.

How much will it cost?

The overall process is meant to be cost neutral for businesses as they can recover VAT and also save as they make lower National Insurance contributions due to the salary sacrifice - both are used to calculate the employer's gross sacrifice.

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Octopus said many drivers are saving 30 to 40 per cent and some up to 60 per cent.

For example, for a 40 per cent tax rate payer opting for a Tesla Model 3, the typical net cost for an employee is £435 every month with the gross sacrifice from salary coming in at £726 per month.

This provides savings of £290 per month, inclusive of income tax and national insurance with just £14 in BiK tax and equates to savings of £13,920 over a four year period.

Inclusive of this is insurance, servicing and maintenance and 'generous' early termination terms for the business should the employee leave.

The above example relies on the motorist driving 8,000 miles a year for four years and also makes the assumption that the company is eligible to recover VAT - 50 per cent on Finance and 100 per cent on Services.

It also assumes the employer wishes to reflect any net savings they made in National Insurance by reducing the gross sacrifice so an adjustment of 10 per cent has been made.

In this case, the company pays £745.41 plus an unrecoverable VAT of £53.19 which equals £798.60.

The sacrifice the employee makes out of gross salary is £726 which, after tax, is equivalent to paying £435.

The company saves £53.19 on National Insurance meaning it is cost neutral for them.

a car parked on the side of a mountain: The Nissan Leaf is one of the most popular electric vehicles currently leased by Octopus © Provided by This Is Money The Nissan Leaf is one of the most popular electric vehicles currently leased by Octopus

Which are the most popular EVs?

Tesla is still one of the most popular electric vehicle leased through Octopus EV but its share dropped from 50 per cent to 28 per cent from the first three months of 2020 compared to the same time frame this year.

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However, Nissan now has a share of 31 per cent compared to 22 per cent last year whilst Audi's have a share of five per cent, up from three per cent in 2020.

KIA, Polestar, Mercedes, VW and Porsche also all have a share.

Why is it launching now?

The launch of Electric Dreams comes exactly one year on from the UK Government's move to eliminate BIK tax for employees taking an EV via salary sacrifice.

The move instantly made an EV financially much better than a petrol or diesel equivalent, leaving drivers with savings on income tax and national insurance.

Electric vehicles are also increasing in popularity with March the best single month for sales of new zero-emission electric cars on record, beating last December by less than 100 sales, according to figures from the Society of Motor Manufacturers and Traders (SMMT).

Fiona Howarth, chief executive of Octopus Electric Vehicles, said: 'Salary sacrifice makes electric cars a no brainer – making them significantly cheaper than their petrol or diesel counterparts.

'With incredibly low company car tax rates on EVs, demand has never been higher – almost a third of employees want the option of an EV as a company car and our own enquiries from businesses have risen seven-fold in the last year alone.

'Salary sacrifice is essentially a zero-cost, zero-effort tool for businesses to fight climate change and save the planet.

'If just 10 per cent of UK's employees switched to electric – we could decimate CO2 emissions of cars, while collectively saving almost £4billion per year.

'We are thrilled to see so many customers offering our service to their employees already and the signs are that many more will sign-up in 2021.'

Read more

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