I have often advised my clients on tax advantages of leasing electric and low emission company cars for their directors and key employees, without reference to actual legislation.
The legislation was in Finance Act 2017, Schedule 2. This amended ITEPA 2003, Section 121A.
Basically the law says that electric low emission cars (defined by HMRC as less than 75g/km of CO2) OpRA (Optional Remuneration Arrangement) rules do not apply. Therefore in calculating the cash benefit v salary foregone, the OpRA can be ignored.
The benefit in kind charge is the list price of car multiplied by the appropriate percentage (currently 2% for 2024/25).
Therefore Employers Class 1A national insurance will be 13.8% (increasing to 15% from 6th April 2025).
Therefore, if the list price of car is £60,000, then the BIK charge will be £1,200 per annum collected via tax code or self-assessment tax return, and employers will have to complete form P11d by 6th July following the Tax year end, and pay Class 1A NIC of £165.60.
Though Salary Sacrifice arrangement can be used for non-electric cars as well, the BIK charge will make this arrangement inappropriate and will create additional costs to employees and in turn the Class 1A NIC charge.