We know that taking a new benefit, like a salary sacrifice car, can come with a lot of unknowns which is why we've put together our most frequently asked questions (and their answers).
Simply click on the question below and the answer will appear! However, if you're looking for a more in-depth look at salary sacrifice cars and how to decide if one is right for you we recommend taking a look at our driver guides.
Salary sacrifice is when you exchange a portion of your salary for a benefit from your employer.
Here at Xcite Salary Sacrifice we help companies offer their employees a car as a salary sacrifice benefit.
You will see that all the cars we offer are either fully electric vehicles (EVs) or plug-in hybrids (PHEVs)as they meet the emission criteria for better tax breaks for you and your employer, to give you a better deal.
All the best makes and models of electric vehicles are available, including Tesla, Audi, BMW, Ford, Volkswagen, Nissan and many more. You can choose from any fully electric and some plug-in hybrid models, with minimal carbon emissions to qualify for the lowest tax rate and maximise your salary sacrifice savings.
A salary sacrifice car offers you the chance to drive a brand new car, without worrying about a large initial payment, depreciating value or when the time comes having to sell it.
Additionally, you can benefit from a salary sacrifice package including all of the extras such as insurance, road tax, maintenance and servicing rather than having to pay various different payments throughout the month.
Your Salary Sacrifice car will include:
• A fully electric vehicle leased on a term between two and four years
• Fully comprehensive insurance including business use
• Full maintenance package including all servicing, tyres and MOTs
• Breakdown cover
• Early Termination Protection in case of unforeseen circumstances
• A dedicated account contact to help you when needed
Salary Sacrifice schemes tend to be one of the most affordable ways to get a brand new electric vehicle. Depending on the exact model and deal you choose, Salary Sacrifice tends to be between 30% and 60% cheaper than other finance methods.
No. As an employee you won’t need to go through a credit check to join the salary sacrifice scheme as the vehicle will be in your company's name. Joining a salary sacrifice scheme won’t affect your credit rating either.
No. You don’t need to pay anything upfront. The only thing you pay are the regular monthly payments that come directly from your salary before you are paid.
No. Even though you’re leasing the car through your employer, the car is for personal use rather than as a business company car. Therefore, there are no restrictions on how you use it.
One thing that you'll need to be mindful off though is that as the vehicle will be leased you'll have an annual milage allowance.
The lease contract for the car and all associated services will be in the name of your employer. Use of the car is then provided to you in exchange for the amount of salary sacrificed so nothing will be in your name.
Your Salary Sacrifice car is deemed a benefit in kind (BIK) and is taxed in the same way as a company car. BIK tax on zero emission electric cars, and those emitting less than 50g of CO2 per km with an electric range of at least 130 miles, is fixed at a very low rate until March 2025, increasing by 1% each year until 2028. This makes Salary Sacrifice a very cost-effective way of running an electric vehicle.
There are a few criteria that you'll need to meet in order to qualify for a salary sacrifice scheme. The general ones include:
•You need to be a full time or part time employee over 18 years of age.
•You must meet the National Minimum Wage threshold after the sacrificed salary has been deducted. We advise a minimum salary of around £30,000.
•You must also meet the car insurance eligibility requirements shown below.
•Your contract of employment must be for a longer duration than the Salary Sacrifice agreement (usually two to four years) and you need to be able to commit to the full term of the lease contract.
Your employer may have their own eligibility criteria which will be communicated to you separately.
You should also consider other financial commitments and the impact that the salary sacrifice car could have on any other changes in circumstances.
The insurance premium is fixed for the lifetime of the agreement and you will be able to get a full break down of this when you join the scheme. What is and isn’t covered will vary slight by provider but to give you a general idea, the current policy we offer includes:
• Social, domestic, pleasure and commuting cover, including use on your employer’s business, are covered as standard. Other forms of business use for the policyholder and/or spouse/civil partner may be considered on a case-by-case basis, but do not order a car without checking first. Any other drivers listed on the insurance (not partner/spouse) will only be covered for social, domestic and pleasure use.
• Unlimited cover for audio and navigation equipment that is permanently fixed to the vehicle and has no independent power source.
• Personal belongings in the car up to £350.
• Replacement locks (see full policy wording for details).
• Damage to your vehicle following incorrect fuelling (no cover for removal of incorrect fuel and refuelling of the car).
• Emergency medical treatment.
• Medical expenses, up to £350 per person.
• Accident transport/vehicle recovery.
• Child car seat cover, up to £100 per seat.
• Courtesy car for the duration of repairs if in case of an accident the car is repaired by an NIG approved repairer.
• If the vehicle is stolen and not recovered or if it is declared a total loss, a courtesy car is provided for up to 14 days or until a settlement offer is agreed (whichever is earlier).
Just like if you’d taken out an insurance policy yourself, you will be charged an excess if you need to claim. This will be charged through your employer. Excess charges are:
• Accidental Damage £250
• Fire, Theft and Malicious damage £250.
• Replacement windscreen £50. There will be no excess charge if the windscreen is repaired.
• An additional excess of £300 applies to drivers aged 17 to 20 for each claim and £200 for drivers aged 21 to 24.
You must be between 18 and 75 years of age (78 at the end of contract). You must have a full driving licence from the UK, EU, EEA or one of the following countries: Andorra, Australia, Barbados, British Virgin Islands, Canada, Falkland Islands, Faroe Islands, Hong Kong, Japan, Monaco, New Zealand, Republic of Korea, Singapore, South Africa, Switzerland, USA or Zimbabwe.
You must be a permanent UK resident and have been a permanent employee for a minimum of 6 months, or a named driver for a permanent employee. You are allowed no more than 2 category 'A' convictions disclosed and no more than ONE FAULT claim per driver disclosed in the last three years. Claims or category ‘A’ convictions over three years old from the car delivery date are acceptable, as are convictions that are shown below in red, which are over five years of age from date of delivery. No drivers have a non-motoring conviction that is not spent under the Rehabilitation of Offenders Act.
No drivers can be employed by the emergency services unless explicitly agreed.
No drivers are celebrities or otherwise in the public eye including professional sportspersons, actors and musicians.
Category ‘A’ Convictions show on online licence checks beginning with the following codes: CU or LC or MW or PC or SP or TS.
Please note If you have any of the following convictions you will not be eligible for the scheme:
• Any conviction which has resulted in a ban in the last 5 years (including any of the minor conviction codes above).
• A conviction in the last 5 years with any of the following letters on your licence:
AC – BA – CD – DD – DG – DR – IN – MS – TT - UT
Yes. Your road tax (also known as car tax, road fund licence or Vehicle Excise Duty) is included for the entire period of your lease agreement.
Zero emission cars are currently exempt from road tax and hybrids pay a discounted rate. After 1 April 2025, all fuel types are due to change to full road tax.
Yes. Your car will have a full standard manufacturer guarantee, exactly as if you had bought the car. The warranty will last for most of the contract term, if not all of it, depending on the length of your agreement.
It will be your responsibility to ensure that the vehicle is in a roadworthy and legal condition. This may involve you regularly checking its condition and following the appropriate channels to complete any maintenance or repair work.
Depending on your employer there may be additional duties that you will have to perform but these will be outlined to you when you join the scheme.
As part of the Xcite Salary Sacrifice Scheme your vehicle will be covered for all routine servicing and maintenance including breakdown and recovery. You will also be covered for tyre replacement through wear and accidental punctures.(Damage caused through negligence is not covered).
Our car insurance includes full accident management, so if your company chooses to include insurance as part of the scheme you simply need to call us and one of our agents will help you.
A car provided through a Salary Sacrifice scheme is taxed in the same way as a company car. It is subject to company car Benefit in Kind (BIK) tax.
This tax is calculated by taking the P11D value of the vehicle (very close to the recommended retail price of the car) and using the CO2 emissions of the vehicle to apply a percentage charge. The reason Salary Sacrifice works so well for fully electric vehicles is that CO2 emissions are zero, so the lowest tax charge applies. This is just 2% until 31 March 2025 and is set to increase by 1% a year until 2028, after which the Government will review it.
For example, if the P11D value is £30,000. The 2% BIK amount is £600 for the year. You then apply your relevant tax band. If you are a 40% taxpayer, for example, then you will pay £240 for the year or £20 per month.
Yes. We will amend your Terms and Conditions of Employment in accordance with Section 4 of the Employment Rights Act 1996. You will be agreeing to these changes when you sign the salary sacrifice agreement.
You will not undergo any credit checks to join the scheme so there will be no impact in terms of credit searches.
However, your salary will be reduced by the Salary Sacrifice arrangement, which means the amount you are eligible to borrow could be affected.
This will depend on how your employer treats your sacrifice and whether they use your salary pre or post sacrifice to calculate deductions like student finance. We recommend speaking with your employer to confirm how this will work for you.
Again the answer to will depend on how your employer calculates pension contributions and whether they use your notional salary or post sacrifice salary to do so. You should speak to your employer with about this to confirm any impact before you join the scheme.
We will be in touch with you three to six months before the end of the contract to discuss your options. We will then work towards a smooth handover if you want a replacement car.
If there is any damage considered to be above fair wear and tear you will be responsible. We follow the British Vehicle Rental and Leasing Association (BVRLA) guidelines, and we can provide information on what may be chargeable. If repairs are needed you can decide whether to get them done prior to collection or pay the invoice from your employer.
You will also be charged for any excess miles above the mileage allowance on your lease contract. This will also be charged through your employer at the end of the contract. There is no option to buy the car at the end of the lease, but you may be able to extend the lease in certain cases.
The cost of handing back the car early will be covered by Early Termination Protection in most cases. The lease agreement will need to be in place for a minimum period, known as the ‘deferral period’ for this protection to apply:
• Resignation (6 months deferral period)
• Parental leave (9 months deferral period)
• Long term sickness absence (3 months deferral period)
• Accidental death (no deferral)
• Loss of driving licence (on medical grounds)
Just contact our expert team using the enquiry form on our contact page and we will talk you through your options. You’ll then be able to sign up to our leasing portal, where you can choose the perfect electric car for you.
If you have a question that hasn't been answered above then get in touch with the team on 01722 548 200 or via our contact page.
