Have you ever looked around your company car park and wondered why there are so many electric and Plug-in Hybrid (PHEV) cars? There is a good reason – the government offers big incentives to help employees make the switch to an electrified car.
If you can choose a company car the tax will be far lower than for a petrol or diesel car, while leasing through a salary sacrifice scheme run by your employer could work out cheaper than running a car using your own finance.
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Make the perk work
If you are lucky enough to be offered a vehicle by your company, the potential savings from an electric car like the MGS5 EV could run into thousands of pounds a year compared to an equivalent diesel. The reason is the rules around benefit in kind taxation, which are designed to encourage drivers into low and zero emission vehicles.
For example, if you are running a mid-size diesel SUV supplied by your employer for personal use, have your fuel paid and are a higher rate taxpayer you’d lose around £9,450 in extra income tax every year, as it is taxed at 34% of the list price. The tax for an MGS5 EV Trophy Long Range in the 2025/6 tax period will be just £404. That sort of saving could pay for a decent holiday – every year.
If you are not quite ready to go fully electric, there are still substantial savings to be made by switching to a Plug-in Hybrid. A 40% taxpayer would pay just £764 in vehicle benefit driving a MG HS Plug-in Hybrid for the 2025/26 tax year and an extra £677 if they receive fuel for private usage too.
As always, check your individual circumstances and ask your accountant or HR department so you can see how much you will save. You might be surprised!
Sacrifice that salary
If you aren’t entitled to a full company car or are looking for an even more efficient way to run a vehicle, there is the salary sacrifice option. Remember how your parents used to encourage you to tidy your bedroom or study for exams by offering 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 have child care, join a gym, buy a bike, and now to help lease an electric car. Salary sacrifice means the cost of these items which are considered desirable is taken out of your wages before they are taxed. As a top rate taxpayer will have 40% shaved off any income over a certain amount by the HMRC plus more for National Insurance, this clearly offers decent savings on ‘big-ticket’ items like a car lease on an MG EV.
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 organisations such as the NHS and other big organisations.
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 be cheaper than going into a dealership with your disposable income and leasing – especially since insurance and maintenance are usually included too.
MG’s range of electric cars are some of the nation’s favourites on salary sacrifice as they are desirable and great value.
What about charging at work?
Lots of employers recognise the environmental benefit of electric cars and may be happy to invest in workplace chargers. There’s even a government-run scheme to help them (the Workplace Charging Scheme) which provides a grant that covers 75% of the purchase and installation costs of new EV chargepoints, up to a maximum of £350 per socket.
Unlike petrol and diesel, which are liable to fuel benefit tax, HMRC lets you charge for free at work without any tax liability. Just remember to clear it with your employer before plugging into any old socket though!
If your employer does offer charging at work, it can also be a game-changer for drivers who can't charge at home. Over an eight-hour working day, a model like the MGS5 EV can add more than 200 miles of charge from a standard 7kW point - enough for 10 days of the average commute in the UK.
To find out more about MG’s award-winning range of fully electric and Plug-in Hybrid cars click here.
