The Independent Vehicle Insurance add-on lets you salary sacrifice the cost of your own comprehensive car insurance when you arrange your own cover for your salary sacrifice car. Because the cost comes out of your gross salary, you save Income Tax and National Insurance on it.
You keep your relationship with your own insurer, and your no claims bonus continues to build.
Who can use it?
Two things need to be true:
- Your company has made the Independent Vehicle Insurance add-on available. If they haven't, you won't see the option in your Employee Portal.
- You have a lease car. Subscription cars already include motor insurance in the cost of the hire.
What makes a policy eligible?
We check these conditions when we receive your insurance schedule:
- There are at least 12 months left on your lease at the policy start date
- The reduction to your salary doesn't take you below National Minimum Wage
- The policy is for the company car or salary sacrificed car only and does not include cover for any additional cars
How does it work?
You arrange your own fully comprehensive policy. You then send us your insurance policy details through the Employee Portal, and your employer reimburses you for the cost of the policy. Your gross salary is reduced to cover it, so you benefit from the tax savings of salary sacrifice.
There's no benefit-in-kind tax when a company reimburses a personal cost linked to a company car, which is why this can be done through salary sacrifice.
How much does it cost?
Your annual policy cost is spread across the term of the policy and sacrificed monthly. The amount sacrificed is your insurance cost plus our service fee:
- 10% for basic rate taxpayers
- 20% for higher or additional rate taxpayers
How do I sign up?
- Arrange your own fully comprehensive policy before your car is delivered. Tell your insurer the car is accessed through salary sacrifice via your company, and that the lease company is the owner and registered keeper, not you. We recommend including business use.
- Upload your insurance details to The Electric Car Scheme employee portal: your insurance provider, policy number, start date, term and cost, along with a copy of the policy document.
- Send a copy of your insurance certificate to your lease company before delivery, and again after each renewal.
When do I need to send my details?
Before your policy starts, and ideally before your car is delivered. If your details reach us after your first salary sacrifice instruction has gone to payroll, we'll start sacrificing from the following month and spread the cost across the remaining months of the policy. The first month's cost can't be salary sacrificed and stays with you.
What happens at renewal?
We'll remind you 30 days before your policy ends. Renew as normal and send us the new schedule. If your new policy costs more or less than the previous one, we'll adjust your salary sacrifice to match.
If your renewal schedule is late, we'll keep sacrificing at your current monthly rate for up to six months and send you monthly reminders. If six months pass with no schedule, the add-on will be removed from your salary sacrifice arrangement. The amounts sacrificed while no policy was in place will be added back to your gross pay, and the tax savings on them will be reversed. Your car isn't affected. You keep the lease and simply pay for the entirety of your insurance from that point.
Who is responsible for the policy?
You are. The policy is in your name with your insurer, so claims, excesses, changes of circumstance and adding drivers are all handled directly with them. If there are any changes to your policy details, you must tell us straight away.
Can I salary sacrifice GAP insurance?
Unfortunately no, we only accept comprehensive vehicle insurance currently.
Who do I contact?
For salary sacrifice queries, email support@electriccarscheme.com. For questions about the cover itself, contact your insurer or broker directly.