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Electric Vehicle Salary Sacrifice - charging point

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An employee is being provided with an electric vehicle under a salary sacrifice agreement. The company is also going to pay for the installation of the charging point at her home, which is a tax-free benefit not caught by the OpRA rules, therefore this will be paid for by salary sacrifice too.

I'm not sure how this should affect the monthly salary sacrifice amounts. If, say, it costs £1,000, can this be salary sacrficed as an additional amount in month one, or do monthly salary sacrifice amounts agreed upfront have to all be equal amounts?

i.e. could we have 48 months at £500 for the vehicle lease, plus £1,000 in month one - or should it be 48 equal amounts of £520.83?

Hope that makes sense.

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By Hugo Fair
06th Mar 2022 12:15

There's a lot to unpack from only a few sentences here, but let's start with:
"installation of the charging point at her home, which is a tax-free benefit not caught by the OpRA rules, therefore this will be paid for by salary sacrifice too."
* On what basis do you believe the installation to be a tax-free benefit?
* If it really is a tax-free benefit then why would OpRA even be under consideration, or indeed Salary Sacrifice?
* Why is the installation even being described as a benefit if 100% of the cost is being reimbursed by the employee?

At the other end of the spectrum, you need to read up on the basics of Salary Sacrifice if you are thinking of operating it for anything - but for starters:
* Salary Sacrifice is an agreed contractual reduction in Salary (not a deduction from an unchanged salary);
* It cannot therefore be varied in an arbitrary manner whenever you feel like doing so.

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Replying to Hugo Fair:
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By Islander
06th Mar 2022 13:44

Thanks Hugo. Taking your points in turn:

* EIM23900 - "Car benefit: special cases: issues relating to electric cars": "Employer pays for a vehicle charging point to be installed at the employee’s home: No taxable benefit because of S202(1) ITEPA 2003 (and S239 (4))."
* Salary Sacrifice is being considered as a means of the employee essentially paying for it from their pre-tax salary rather than their post-tax salary. However, if OpRA applied, then the amounts sacrificed would still be taxed.
* EIM44131 - "Optional remuneration arrangements: excluded exemptions" includes section 239 ITEPA 2003 - exemption for payments and benefits connected with taxable cars, vans and heavy goods vehicles. This indicates that the installation falls outwith OpRA, so can be paid for by salary sacrifice, with a £Nil BIK.

I appreciate that the contract variation must be agreed upfront, therefore cannot be varied in an arbitrary manner. However, does that necessarily mean that the amount sacrificed monthly must be the same throughout the period of the agreement if all is agreed upfront?

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Replying to Islander:
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By Hugo Fair
07th Mar 2022 12:36

"I appreciate that the contract variation must be agreed upfront, therefore cannot be varied in an arbitrary manner. However, does that necessarily mean that the amount sacrificed monthly must be the same throughout the period of the agreement if all is agreed upfront?"

Honest answer is that I don't know (having never encountered anyone trying to do this) ... but logic says that you can't - precisely because, as I said, Salary Sacrifice is an agreed contractual reduction in Salary (not a deduction from an unchanged salary).
And I can't see any way in which a single Salary Sacrifice agreement could have such a dramatic change in contractual salary after just one month (although I suppose two overlapping/concurrent but distinct Salary Sacrifice agreements ...?)

But to go back to my opening reply, the purpose of Salary Sacrifice is usually so as to allow provision of a BiK (that would otherwise be taxable) to be made in a way that avoids the EE paying tax on it.
If your references are valid (I've no doubt that they are but don't have the time to study them right now), then this particular benefit is already free of tax ... so Sal Sac isn't appropriate.

The quite separate decision of the EE to buy something (or in this case reimburse the ER) is no more relevant than trying to use Salary Sacrifice as a method to buy a 3-piece suite or whatever ... and, No, that's not an option.

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Replying to Hugo Fair:
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By Hugo Fair
07th Mar 2022 12:47

BTW, just in case Sal Sac comes up on your radar in the future, there's a couple of things to keep an eye on as they frequently trip up the unwary:

* Because it's a contractual change in salary, there's the possibility (especially if regular pay varies) for there to be a week when pay drops below NMW - at which point you are in trouble.
* Also if the employee is entitled to something that is directly calculated with reference to actual pay (say SMP) then the EE will get less than she would have pre-Sal Sac
* But conversely, if the EE goes on to zero earnings (say during maternity) then the benefit must continue to be provided although no 'contribution' is being made (as it isn't really a contribution)!

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