It has recently been announced by the Chancellor of the Exchequer, Jeremy Hunt, that there will be a 2% reduction in employee National Insurance contributions for salaries in the 20% tax bracket (under £50,271).
The reduction sees the NIC rate reduce from 12% to 10%, effective from the 6th January 2024.
Employees in the higher income tax bracket (40% and 45%) are unaffected by the change – their 2% contribution stays the same.
For standard rate (20%) taxpayers this is will mean:
• The upside is that an employee earning a typical average salary of £39,542 will be £790 a year better off.
• The downside is that an employee earning less than £50,271 per annum with a £500 gross salary sacrifice will see their net salary reduction (the actual cost) go up by £10 per month (2%) or £120 per year from January.
• But the upside is that the same employee will still be better off annually by £790 minus £120 or £670.00.
This means that employees already on the TCH Salsa Employee Car salary sacrifice scheme, and those considering taking a vehicle on the scheme, will still be better off despite the slightly lower NI contribution savings due to the 2% NIC reduction.
A salary sacrifice car scheme still provides a great benefit to all employees who would prefer fixed cost motoring, including everything, for the contract period, with ‘economies of scale’ savings rolled into the agreement.
Cost of charging an EV at home
By far the cheapest way of charging an EV is at home.
Smart home energy tariffs can give you an off-peak electricity cost and allow you to charge your car when demand and prices are low – for example between midnight and 6.00 am; you can even schedule your EV to charge only during these off-peak times. Your energy provider may have such a tariff available - or if not, consider switching to one that does.
Based on home charging and a drive of 196 miles, there will be a £17 saving when compared with putting fuel in a car (based on a car doing 8.8 miles per litre or 40mpg.)
| | Miles | Cost |
Electricity, kWh | £0.08 | 196 | £14.70 |
Petrol, Pence per litre | £1.45 | 196 | £32.25 |
Saving | | | £17.55 |