It’s been an exciting year here at Xcite Salary Sacrifice, with the launch of our new website. Electric car leasing is becoming an increasingly popular choice. But what industry insights has 2024 given us and what trends are we expecting to see for salary sacrifice in 2025?
Influence of New Leadership
The leadership change has been a bit of a mixed bag for salary sacrifice. On the one hand, the increase in employer National Insurance rates makes salary sacrifice more attractive to employers as the savings are now greater. In conjunction with Labour’s general focus on green initiatives and electric vehicles (EVs), this seems to point to good times ahead for the electric car leasing industry.
However, as with almost any change, there is inevitably some nervousness around how the new government handles the wider economy and what this could cost businesses in higher taxes. What we hope for, is that EVs become more affordable and that manufacturers continue taking the pricing action that we’ve started to see as the year has progressed. A move towards price parity between EVs and internal combustion engine (ICE) vehicles from a lease cost perspective, really brings the benefits of salary sacrifice home, for employees.
Lead Times Falling
We’ve seen the lead times on electric cars reduce dramatically over the last 12 months. We now have access to more vehicles from a greater number of manufacturers in far quicker timeframes than previously. This spells good news for companies wanting to offer salary sacrifice schemes, as it means they’ll now be able to put drivers into vehicles much more quickly.
Electric Car Discounts Increasing
Though we’re seeing more discounts on electric cars now, it’s not all good news, as we’ve seen volatile Residual Values (RVs) rock the sector. However, as the year comes to a close, we’re seeing a levelling of these RVs, which bodes well for 2025. The government is looking at supporting RVs through a standardised battery health certification for used electric vehicles and potentially through reducing VAT on them too. This will undoubtably increase consumer confidence in the used EV market.
Looking Ahead to 2025
As well as a levelling out of RVs, continuation of the discounts and falling lead times, we’re keenly anticipating the arrival of some much longer range electric vehicles new to the market, tackling one of the most problematic barriers to electric vehicle uptake which is range anxiety. The 2025 refresh of the Tesla Y long range version, for example, will produce a range that potentially stretches to 430 miles and more vehicles will follow suit, since removing this key barrier could uncork a deluge of fresh converts.
Top Salary Sacrifice Tips for 2025
Xcite Salary Sacrifice Director, Tim McNally, says: “If a company is committed to electrifying their fleet, the introduction of salary sacrifice where EVs are the only viable option can really help. If ‘perk’ company car drivers are all moved across to salary sacrifice electric vehicles, where they’ve historically chosen ICE vehicles, this not only benefits the company’s bottom line but goes a long way towards enhancing corporate social responsibility and brand image”.
“Xcite Salary Sacrifice is a part of Wessex Fleet and as such, can offer a full range of fleet management services. Please get in contact to find out how to incorporate salary sacrifice as part of an overall fleet strategy.”
Xcite Salary Sacrifice Consultant, Ralph Burbeck, says: “Full EVs will continue to be the most tax efficient vehicles to lease through the salary sacrifice scheme in 2025 due to the low BIK percentages.
“For drivers with the ability to charge at work or at home, who cover appropriate mileages, fully electric vehicles are the way to go. However, for those without this ability, who do high mileage on regular occasions and want to consider plug-in hybrid vehicles, these are still cheaper through the scheme than procuring them on a personal lease basis.
“The key thing for drivers to remember is to pick a car that is suitable for their needs, including size of vehicle, specifications, and most importantly, range.”
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