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Maximize Your Savings: Lease an Electric Car Through Salary Sacrifice and Slash Energy Bills with Solar and Bidirectional Charging


"Driving electric is not just about sustainability; it's a smart financial move that benefits both you and the planet." — Energy Saving Trust

If you're considering leasing a new car, now is the perfect time to explore electric vehicles (EVs). Leveraging your employer's salary sacrifice scheme for electric cars can make driving an EV more affordable than ever. When combined with solar energy and an EV equipped with bidirectional charging, you can significantly reduce your energy bills—without the need for a separate home battery system. Let's delve into how this ideal setup can maximize your savings and efficiency.


Understanding Salary Sacrifice Schemes for Electric Cars


What Is a Salary Sacrifice Scheme?


A salary sacrifice scheme allows you to exchange a portion of your pre-tax salary for a non-cash benefit—in this case, an electric car. This arrangement reduces your gross income, leading to savings on Income Tax and National Insurance Contributions (NICs).


Benefits:

  • Tax Efficiency: Lower taxable income results in less tax paid.

  • National Insurance Savings: Both employees and employers save on NICs.

  • Inclusive Packages: Lease payments often include insurance, maintenance, and breakdown cover.


Benefit-in-Kind (BIK) Tax Rates for EVs


Electric cars have ultra-low BIK rates, making them highly tax-efficient:

  • 2023/24 Tax Year: 2%

  • 2024/25 Tax Year: 2%

  • 2025/26 Tax Year: 3%


Example for a Higher-Rate Taxpayer (40%):


  • EV P11D Value: £40,000

  • BIK Rate: 2%

  • Taxable Benefit: £800 (£40,000 x 2%)

  • Annual BIK Tax Payable: £320 (40% of £800)

  • Monthly BIK Tax: £26.67


Financial Benefits of Leasing an EV Through Salary Sacrifice


Savings Breakdown

Comparison of Leasing an EV vs. Petrol/Diesel Car

Item

Electric Car

Petrol/Diesel Car

Monthly Gross Salary Sacrifice

£500

N/A

Monthly Net Cost After Tax Savings

£280

N/A

Monthly Fuel/Electricity Cost

£20 (charging at home)

£120 (fuel)

Annual BIK Tax

£320

£2,560 (assumed at 20% BIK)

Total Monthly Cost

£306.67

£620

Assumptions: Higher-rate taxpayer, petrol/diesel car with similar P11D value and average fuel efficiency.

Annual Savings: Over £3,700


Check If Your Employer Offers a Salary Sacrifice Scheme


Steps to Take

  1. Contact HR Department: Inquire if an electric car salary sacrifice scheme is available.

  2. Suggest Implementation: If not available, propose introducing the scheme. Employers benefit from NIC savings and promoting green initiatives.

  3. Explore Providers: Companies like Octopus Electric Vehicles and Tusker specialize in managing these schemes.

Quote:

"Salary sacrifice schemes for ultra-low emission vehicles are a win-win for employees and employers alike." — HM Revenue & Customs (HMRC)

Bidirectional Charging (Vehicle-to-Grid Technology)


What Is Bidirectional Charging?

Bidirectional charging, or Vehicle-to-Grid (V2G) technology, allows your EV to both charge from and discharge electricity back to your home or the grid. This effectively turns your car into a mobile energy storage unit.


Benefits:

  • Energy Savings: Use your EV's battery to power your home during peak electricity rates, reducing your energy bills.

  • Financial Gains: Potentially earn money by exporting electricity back to the grid during high-demand periods.

  • No Need for a Home Battery: Your EV serves as your energy storage, eliminating the cost of a separate home battery system.


Potential Earnings and Savings


  • Annual Earnings from V2G: Up to £400 per year1.

  • Energy Bill Reduction: Significant savings by using stored energy during peak times.


Integrating Solar Panels with Your Electric Car


Benefits of Solar Integration

  • Renewable Energy Source: Generate your own electricity to charge your EV and power your home.

  • Reduced Charging Costs: Charge your EV for free during daylight hours.

  • Environmental Impact: Lower your carbon footprint by using clean energy.


Financial Considerations


Installation Costs:

  • Solar Panels (4 kW system): £5,000 - £7,000.


Annual Savings:

  • Electricity Bills: Up to £400.

  • Fuel Savings: Approximately £1,000 when charging your EV with solar power.


The Ultimate Savings Scenario


Combining Salary Sacrifice, V2G, and Solar Energy


Annual Financial Impact:

Item

Amount (£)

Net Cost of EV Lease

-£3,360

Fuel Savings

+£1,000

V2G Earnings

+£400

Electricity Bill Savings

+£400

Total Annual Impact

-£1,560

Note: Net cost of EV lease accounts for tax and NIC savings.


Over a 3-Year Lease Term:

  • Total Savings/Earnings: £4,680


Why You Don't Need a Separate Home Battery


Since your EV with bidirectional charging can store and supply energy to your home, there's no need for an additional home battery system. This not only saves on the upfront cost of a home battery (approximately £4,000 - £6,0003) but also simplifies your energy setup.


Advantages:


  • Cost Savings: Avoid the significant expense of purchasing and installing a home battery.

  • Efficient Energy Use: Utilize your EV's large battery capacity for both driving and home energy needs.

  • Space Saving: No need to allocate space in your home for a bulky battery system.


Environmental and Lifestyle Benefits


  • Zero Emissions Driving: Reduce air pollution and greenhouse gases.

  • Energy Independence: Generate and manage your own energy without the need for additional storage solutions.

  • State-of-the-Art Vehicle: Enjoy the latest technology and features.

Quote:

"Electric vehicles powered by renewable energy are essential for a sustainable future." — Committee on Climate Change4

Practical Considerations


Availability of Your EV for Home Energy Use

  • Daily Usage Patterns: If your car is parked at home during peak energy demand times (e.g., evenings), you can use it to power your home.

  • Battery Health: Modern EVs are designed to handle regular charging and discharging cycles without significant degradation.


Potential Limitations

  • Vehicle Absence: If you frequently use your car during times when you'd like to draw energy, the benefits may be reduced.

  • Charging Infrastructure: Ensure your home charging setup supports bidirectional charging. This may require a specific charger model and installation by a qualified electrician.



By checking if your employer offers an electric car salary sacrifice scheme, you can access significant financial benefits and drive a cutting-edge EV at a reduced cost. When you choose an EV equipped with bidirectional charging and integrate solar panels at home, you further maximize your savings by reducing or even eliminating your energy bills—without the need for a separate home battery system. This combination not only offers substantial economic advantages but also contributes positively to the environment.



References

  1. OVO Energy and Nissan - Vehicle-to-Grid Trial Results 

  2. Energy Saving Trust - Solar Panels Advice 

  3. Solar Energy UK - Battery Storage Costs 

  4. Committee on Climate Change - Reducing UK Emissions 

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Written by: Robert Costart

Friday, 22 November 2024

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