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Electric cars: how to cut the cost – and the best used deals

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The petrol crisis has made electric cars look more appealing than ever – but paying for one might be putting you off making the switch.

A little-known tax break could make all the difference. If you can persuade your employer to sign up, it will let you halve the cost of leasing a brand new electric car.

For years, employees have had the chance to get a new bicycle or childcare vouchers through a salary sacrifice scheme. Now employers are waking up to the fact that there are huge benefits in offering staff electric cars in the same way.

The newly set up Edinburgh-based loveelectric, which specialises in supplying electric cars through salary sacrifice schemes, says a higher-rate taxpayer (those earning £50,271+) can typically cut the cost of leasing a popular Tesla Model 3 from £524 to £267 a month by taking this option instead of a traditional lease. This assumes a lease term of 48 months and agreed mileage of 5,000 miles a year.

View image in fullscreen‘A lot of people still don’t know there’s a “bike to work” scheme for electric vehicles,’ says loveelectric’s Steve Tigar. Photograph: Miles Willis/Getty Images

“A lot of people still don’t know there’s a ‘bike to work’ scheme for electric vehicles,” says Steve Tigar, the man behind loveelectric. He says the fuel crisis has only furthered the interest in electric cars.

The car lease payments are deducted from your gross salary, so you will pay less income tax and national insurance, and your employer will reduce its national insurance contributions bill, too.

“Higher-rate taxpayers can typically halve their monthly payments but there are also substantial savings for basic-rate taxpayers,” Tigar says. “The case for going electric was already strong, and now it’s overwhelming.”

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Tigar, who markets the scheme to employers as “one lovely little employee perk that won’t cost you a penny”, says the biggest problem is finding enough electric cars to meet the demand.

Waiting times for the Tesla Model 3 – his most-requested car – are up to two months, although he says they are often able to get other models quicker by working directly with dealers.

Next April’s national insurance increase will only make the scheme more attractive

The scheme will particularly appeal to higher-rate taxpayers who drive a reasonable distance to work each day – 30-40 miles each way – and are currently spending £12 a day on fuel. For the same sum they can lease an electric car. Loveelectric is currently advertising the Nissan Leaf for £159 a month and the VW ID.3 from £173 a month for higher-rate taxpayers.

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Next April’s national insurance increase will only make the scheme more attractive. The fact that company car drivers will only pay a maximum 2% benefit-in-kind company car tax rate on electric vehicles (EVs) until 2025 is the icing on the cake.

For many, the only problem will be persuading their employer to offer the scheme, although there are a host of firms out there to manage the entire process on its behalf. Octopus Energy has a scheme called Electric Dreams and is among a host of specialist firms offering a one-stop shop.

View image in fullscreenLoveelectric says a higher-rate taxpayer could cut the cost of leasing a Tesla Model 3 from £524 a month to £267 a month by choosing a salary sacrifice scheme instead of a traditional lease. Photograph: David Rawcliffe/Alamy

Simon Down, an associate director at Deloitte and the proud driver of a 100% electric car acquired through his company’s scheme, says employers are realising that in addition to the potential savings, there are other benefits.

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“Most big companies have signed up to reduce their carbon emissions to net zero by a certain date, and switching their car fleet to EVs can play a big part in that, particularly vehicles used on company business or for getting to and from the workplace,” he says.

“At Deloitte, our salary sacrifice scheme is open to over 18,000 employees and in the last 12 months we’ve seen an increase in the number of cars on our scheme, with almost all employees opting for fully electric vehicles that will help us to deliver our sustainability and carbon reduction commitments.”

Before you sign up, there a few factors to consider. There may well be implications for your pension, particularly if you are close to retirement. If you leave your job during the term, some agreements will impose an early termination fee. Check what this will be before you sign – and check what will happen if you go on parental leave.

Used electric cars that won’t break the bank

If the fuel protests have left you thinking that now’s the time to buy an electric car – and you don’t want to lease one – here’s our pick of the best used bargains.

Renault Zoe

You can now pick up an immaculate, low-mileage Renault Zoe for less than £6,000. For that money you are getting the 22kWh model with a real world range of 70-85 miles – depending on the weather and terrain – that is perfect for local trips and short commutes. Most people selling these are buying EVs with a longer range. Battery lease is extra and adds £59 a month.

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Nissan Leaf

The first big-selling electric car in the UK and a great used bargain – the technology is proven and it is cheap to buy. The older models can be bought for as little as £4,700 (2011 model with 75,000 miles on the clock). Buyers looking for the bigger 30kWh battery and faster charging will have to find £10,000 – but you will get a range of 130 miles or so, compared with 75 miles with the older cars.


View image in fullscreenAn MG ZS EV. Photograph: ZarkePix/Alamy

MG’s family-size EV has gone rather under the radar but it is a good car with one of the longest warranties out there – seven years. It’s a good bet for growing families. A three-year-old car with 10,000 miles on the clock will set you back £18,000 but you get a 44kWh model capable of 150 miles or so on a single charge. MG’s new electric estate cars are worth a look, too, but cost more.

Hyundai Ioniq

A premium family-size electric car with a 120- to 130-mile range and a large and practical boot. You will have to find £16,500 for a 2019 model with 80,000 miles under its belt but you will be rewarded with plenty of gizmos. However, at this price you are almost better off leasing new.