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Everyone loves a bargain, and it’s no wonder these car schemes have grown in popularity among employers. Plus, with demand for EVs going through the roof, more and more drivers turn their heads towards such car schemes, looking to switch to an EV and save a bit of money.
Salary sacrifice schemes for staff allows employees to reduce their cash earnings in return for a non-cash benefit, such as a car. This means an EV salary sacrifice scheme can offer significant savings on income tax and National Insurance, reducing the cost of a car by up to 60%. This depends on the salary bracket and type of EV.
So what makes these car schemes so appealing? Well, a few factors are driving that growth in demand:
Electric car salary sacrifice schemes in the UK allow employees to lease electric vehicles by paying from their gross monthly salary. This reduces income tax and National Insurance contributions, leading to cheaper monthly car payments.
These schemes function similarly to cycle-to-work, childcare, and pension salary sacrifice plans, making it a tax-efficient way to lease an EV.
Here’s an example of how much you could save on an electric vehicle should you decide to pay for it through your salary.
The table showcases common scenarios based on popular EV models and UK salaries. It includes calculations for income tax and National Insurance Contributions (NIC) savings and the net monthly pay deduction.
Please note these are estimated calculations. Your personal case is likely to be different.
Let’s explore the best EV salary sacrifice providers you should consider if you're planning to get a car next year. We’ll explain each one and try to help you in your research.
This is a curated list and only includes the companies that have provided substantial evidence they are offering schemes highly recommended by their customers and also focus on electric cars.
What we like: The Electric Car Scheme work with some of the biggest leasing and subscription companies in the UK and have a solid track record of setting up salary sacrifice for companies and employees. One factor stands out and that is their early termination protection which covers both the employer and employee should they decide to cancel early.
As mentioned above, The Electric Car Scheme partners with Voltric, which is another EV subscription provider.
Similarly to others, their scheme also provides insurance, maintenance, breakdown cover, and optional home charging installation as part of their offering.
The Electric Car Scheme was launched in the summer of 2020 and has since received a ton of positive reviews from customers who praised their service and simplicity.
👉 Go to their website and learn more about their salary sacrifice scheme *.
What we like: Octopus EVs are leading the electricity-only revolution, and their car schemes are just as compelling. It’s a full “package” which includes an electric car, home charger, energy tariff, insurance, breakdown cover and tyres.
Octopus EVs entered the salary sacrifice market relatively recently in April 2021, but it did so with a bang! The scheme was first called Electric Dreams and had 15 businesses signed up at launch. It is now simply part of Octopus Electric Vehicles.
This salary sacrifice differs from others because they offer free home charging installation and 100% renewable energy with their EV home energy tariffs.
New customers even get 4,000 free miles of home charging. For those who can’t charge at home, Octopus EVs offers the same amount of miles through their Electroverse charging app. Octopus’s fleet includes the latest Tesla, Kia, Nissan and Hyundai vehicles, on flexible terms from usually 12 to 48 months with the option to extend or return the car.
👉 Reach out and learn more about their salary sacrifice services *.
What we like: When you are in this industry for as many years as Fleet Evolution, you learn a thing or two when onboarding a business. They boast about, and rightfully so, that they take care of all the admin and support the business and employees through the signup process.
We can confidently say that Fleet Evolution is one of the veterans in this space. They introduced the very first electric car salary sacrifice scheme in the UK back in 2011. Since then, they've served a diverse range of clients - from small businesses with less than five employees to large organisations with over 10,000, according to their website.
Fleet Evolution's approach is refreshingly simple, putting the needs of HR departments front and centre instead of prioritising the fleet department. This means they can streamline the signup process, making it as painless as possible for businesses looking to implement a salary sacrifice scheme for electric cars.
Through their scheme, business and employees can access various electric and hybrid cars, including the Mini Electric, MG 5, Tesla Model 3 and Ford Mustang Mach-e.
Fleet Evolution also offers a salary sacrifice scheme specifically aimed at micro businesses and new start-ups. They seem to be trying to break down the financial barriers preventing smaller businesses from implementing and offering sal-sac to their employees. Learn more about Fleet Evolution.
What we like: Tusker has a very strong history of supporting the adoption of EVs and winning multiple environmental awards (e.g. Green Apple Awards). Tusker also scooped the “Trusted Service Awards 2023”, as organised by Feefo.
Tusker is another veteran in this space, launching more than 15 years ago. They offer company electric car schemes for businesses in both the private and public sectors.
Tusker’s sal-sac offering includes fully-managed service, including insurance, maintenance, and breakdown cover, making it easy for employees to make the switch to EVs.
The company was founded in 2000 and has since become one of the UK's leading providers of car benefit schemes for businesses, focusing on promoting sustainable and environmentally-friendly transport options. Learn more about Tusker.
What we like: We all like reading customer reviews when choosing a company or a service. Well, if you’re an employer looking for a salary sacrifice scheme, you will notice that WeVee has nearly 500 TrustPilot reviews with an average score of 4.6 out of 5. Hard to argue with that!
WeVee claims to have a mission to make the transition to electric vehicles easier, more affordable, and more sustainable for businesses and individuals. And by browsing their website and available cars and pricing, it’s easy to see how they are trying to be as transparent as possible
Similarly to others, they offer flexible contracts, free delivery and installation, and ongoing support throughout the lease period (which can include personal leasing and fleet management services). Learn more about WeVee.
What we like: Judging by the information we found on their website, Zenith has quite a comprehensive fleet management software that allows their customers to access real-time data and reports on their fleet performance. This includes detailed car usage, consumptions, maintenance costs and driver behaviour.
Zenith helps people lease EVs through their employer's salary sacrifice scheme and offers many different EV models to choose from, including popular brands like Tesla and BMW.
Their sal-sac offering is just one part of what they do. They offer many other vehicle leasing and fleet management services, and they've been doing it for over 30 years.
Zenith works with some of the biggest companies in the UK, including Aviva, who have been using them to offer EVs to their employees since 2021. Learn more about Zenith.
What we like: LeasePlan has a very strong focus on sustainability and innovation, and the company aims to achieve net zero emissions from its fleet by 2030.
LeasePlan is a major player in fleet management and driver mobility. Their corporate website says they manage more than 1.9 million vehicles in over 30 countries.
One of their services is salary sacrifice for cars, launched in the UK in November 2016.
Judging by their website, the target customers seem to be companies with more than 1,000 employees. So, if you own or work for an organisation of this size, you may want to consider LeasePlan. Learn more about LeasePlan.
What we like: Sometimes, we must return to basics. While researching this article, we really liked Fleet Alliance’s salary sacrifice calculator. It clearly outlines the employee and employer cost based on factors such as EV model, lease term, mileage, salary and estimated car insurance cost.
Fleet Alliance launched its salary sacrifice scheme for SMEs in October 2020, following introducing of new BiK tax rates for electric vehicles. These changes made EVs more affordable and appealing for both employers and employees.
Last year, electric vehicles took a record share of the new car orders through Fleet Alliance, accounting for 42% of all new orders. This reflects Fleet Alliance’s commitment to promoting green mobility and reducing carbon emissions. Learn more about Fleet Alliance.
What we like: They specialise in EVs only and seem to have good reviews online. There's evidence of working with some well-known brands, so we thought are worthy mention in this review.
Go Green is another company that provides salary sacrifice programmes for company electric and hybrid vehicles.
Go Green offers a comprehensive car leasing package that includes a brand-new car every 2 or 3 years, all servicing and repairs, and unlimited tyre replacement/repair, even for accidental damage. When comparing them to others on our list, it’s probably not the most flexible option.
Some other benefits they mention on their website include no credit checks, road tax included, and up to 2 named drivers allowed. Learn more about Go Green.
We now know the benefits of salary sacrifice. So let's turn our focus on car subscriptions. You'll not only be saving on your income tax, but the nature of a car subscription means you'll have a lot more flexibility and less stress when it comes to the usual costs associated with owning a car.
A key benefit is that you'll be able to switch your cars frequently, and you can get your vehicle more quickly. But, more importantly, you won't have to worry about maintenance costs, insurance, or breakdown cover as they're taken care of by the subscription provider and the EV scheme.
To illustrate what a car subscription salary sacrifice could look like for an employer and an employee, we've included some estimates for some popular EV models.
The usual monthly subscription cost is £843/month, but it goes down by 30% when on salary sacrifice, saving you £256/month.
To break it down for you, your monthly savings of £256 comprise £101 in National Insurance, £168 in income tax, and a reduction of £13 in Benefit-in-Kind (BiK) tax.
The usual monthly subscription cost is £566/month, but it goes down by 30% when on salary sacrifice, saving you £170/month.
To break it down for you, your monthly savings of £170 comprise £67 in National Insurance, £113 in income tax, and a reduction of £10 in Benefit-in-Kind (BiK) tax.
The usual monthly subscription cost is £1,299/month, but it goes down by 30% when on salary sacrifice, saving you £396/month.
To break it down for you, your monthly savings of £396 comprise £155 in National Insurance, £259 in income tax, and a reduction of £18 in Benefit-in-Kind (BiK) tax.
The usual monthly subscription cost is £599/month, but it goes down by 30% when on salary sacrifice, saving you £177/month.
To break it down for you, your monthly savings of £177 comprise £71 in National Insurance, £119 in income tax, and a reduction of £13 in Benefit-in-Kind (BiK) tax.
EV salary sacrifice schemes are worth it for employees looking to save on tax and reduce their monthly payments on electric vehicles. By paying from pre-tax salary, employees can save on both income tax and National Insurance, making it a cost-effective way to lease an EV. Additionally, the scheme supports eco-friendly transportation and can offer significant long-term savings.
However, such electric car programmes may not be suitable for everyone. There are a few things to remember when deciding:
If you work for the NHS, you’re in luck! The NHS Fleet Solutions is the provider of a salary sacrifice lease car scheme for the NHS and other public sector employees.
This means that you can lease a car from them and pay for it by reducing your gross salary before tax and national insurance deductions.
Some of the EVs currently available from NHS Fleet Solutions include the BMW i4, Renault Zoe, Volvo XC40 and Volkswagen ID.5.
You can lease a shiny new electric car through your employer for a set period, usually 36 months but it can be shorter. The best part? You pay for the lease from your salary before income tax, and National Insurance deductions are applied, which means you get to keep more of your hard-earned cash and save on the tax you'd have otherwise paid on the lease.
The employer acquires an electric vehicle, typically under a lease arrangement, and the employee pays for it with their pre-tax salary. This way, the employee has offset the cost that the employer has incurred.
By using a salary sacrifice scheme, the employee can save money on income tax and national insurance payments, as well as a Benefit-in-Kind tax for electric cars. The BiK rate for EVs has increased from 1% to 2% from 6th April 2022 and is currently fixed until April 2025, which is much lower than for petrol or diesel cars. The employer can also save money on national insurance contributions and claim capital allowances for electric cars.
However, not all employers offer salary sacrifice schemes for EVs and not all employees are eligible for them. A sacrifice scheme can work well for some people who want to drive a new electric car for less money than applying for traditional car finance.
It’s usually best to check whether your employer offers an EV salary sacrifice scheme and what their terms and conditions are.
In theory, any electric car is eligible for a salary sacrifice scheme, but the choice of vehicles available to you will be determined by the cars offered by your employer and the scheme they have signed up for.
You should check with your employer what models and specifications they have in their scheme and how much they cost per month.
Here are some examples of EVs you can potentially get your hands on:
Not everyone can get an electric car through a salary sacrifice scheme. It is typically available only to employees whose employers offer the scheme. Additionally, the employee's salary after the sacrifice must remain above the minimum wage, ensuring compliance with UK wage regulations.
Employers need to:
Employees need to:
An electric car salary sacrifice scheme can have several benefits for employers, including:
However, there may also be some factors companies need to consider as well:
Electric car salary sacrifice schemes can be beneficial for employers who want to promote green mobility and save money on taxes and national insurance contributions, but it may also require careful planning and communication with both the leasing company and your employees.
The chosen scheme will allocate an account manager who will guide the company through the process. The lease, or subscription, company will handle the implementation and paperwork with minimal effort on the side of the business.
Some EV scheme providers claim it can take up to 4-5 weeks.
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*We are affiliate partners to OctopusEVs and The Electric Car Scheme. We may get compensated for any purchases that happen as a result of visiting their websites. There's no cost to our users.
