Grant yourself savings
First, let’s look at the best way to buy an electric car. Very few people buy a car outright with cash these days, but even if you do buy a model like the i3 you’ll be entitled to £3,000 from the government in the form of a Plug-in Car Grant (PiCG) which will be claimed by the dealer and taken off the final bill – as long as the car has a price of less than £50,000 before options.
Most buyers will use some sort of finance or run a car through the company however, and this is where there are even more savings.
Firstly, let’s assume you are a ‘normal’ private buyer, looking to get a car on a lease or contract purchase scheme. Because these types of finance take into account the predicted resale value of the car when you hand it back in a few years, the stronger prices electric cars fetch when they are eventually sold makes your monthly payments cheaper.
If you are an employee there’s an even cheaper way of going electric though, by getting the Inland Revenue to let you off the tax you’d be paying on the lease through Salary Sacrifice.
Sacrifice that salary
Remember how your parents used to encourage you to tidy your bedroom or study well for exams with a little bit of pocket money? Well the government does the same to help encourage us to do things which are good for us, like join a gym or buy a bike. And now they’ll give you help to lease an electric car.
Salary sacrifice means the cost is taken out of your wages before they are taxed. As a top rate tax payer will have 40% shaved off any income over a certain amount by the Inland Revenue (plus more for National Insurance), this clearly offers decent savings on ‘big-ticket’ items like a car lease.
Firstly, you need to make sure your employer is on board. If they’re already involved in a Cycle To Work or child care program, then this won’t be too much more work for them and it’s already offered by big organisations such as the NHS.
The hard work is done by a leasing company which makes it as simple as possible for everyone. Unlike private lease or Personal Contract Hire, there’s no upfront cost and you’re not expected to pay a ‘balloon’ cost at the end of the lease. You just sign up for the monthly payments and that’s it – they are taken straight out of your wages every month before they are taxed. The lease company will usually take care of the servicing, maintenance and insurance too.
The actual monthly price will vary according to a number of factors, but expect it to knock more than £150 off the amount you’ll notice going from your pay packet if you are a 40% taxpayer. That will make it cheaper than going into a dealership with your disposable income and leasing petrol or diesel.
Cars like the BMW iX3 can be made more affordable to employees of companies