skip to Main Content
Car, Electric

Leasing Electric

4 important reasons why employers should consider an EV salary sacrifice scheme

By Chris Black, Commercial Director at vehicle leasing experts LeasePlan UK

Salary sacrifice schemes have become very popular over the past few years as employers look to find new ways of delivering cost effective benefits package in a way that attracts and retains the best talent. These schemes allow employees to use a portion of their gross salary in exchange for perks such as childcare vouchers or a company car.

Electric Vehicle (EV) Salary sacrifice in particular is having a renaissance, following the government’s announcement that from April 2020-21 zero emission cars will pay 0% company car tax. What’s more, rates will continue to stay low at 1-2% for the next 5 years, making them an attractive proposition for employees and employers alike.

A few prevailing misconceptions around cost of providing electric cars and legacy taxation have prevented some businesses from exploring EV Sal Sac again. But now, in a time when cost-cutting and corporate responsibility (CR) are two of the biggest pressures facing organisations, there really hasn’t been a better time to take advantage.

In this article, we look at some of the reasons why an EV salary sacrifice could be right for your organisation.

It offers big savings for employers and employees

One of the biggest misconceptions around EV salary sacrifice is that it’s expensive. In fact, almost half (49%) of HR bosses and senior business leaders still believe that the electric vehicle (EV) salary sacrifice scheme would add extra cost to their organisation.

This comes at a time when most businesses (62%) are being challenged to reduce the cost of employee perks and benefits in the wake of COVID-19.

The truth is quite the opposite. Employers can actually save money through EV salary sacrifice schemes through lower National Insurance (NI) contributions.

Not only that, but employees can enjoy significant cash savings due to a change in legislation that came into effect in April this year which made EV company car drivers exempt from paying benefit-in-kind (BiK) tax – something that one-fifth of HR bosses are currently unaware of. What’s more, employees don’t need to worry about insurance, servicing, breakdown cover, glass and tyres, or accident management as all of these are all taken care of by the provider.

It’s better for the environment

Using an EV salary sacrifice scheme can help your employees to switch to more environmentally friendly vehicles by providing them with cash-saving incentives and a wide choice of vehicles. Not only are EVs cheaper to run, they also reduce an employee’s carbon footprint and help improve urban air quality.

With more than half of employees (57%) showing an increased interest in EVs since March 2020, and 63% saying they would choose an EV as a company car if it was an option, it’s clear that the demand is already there. For organisations that want to demonstrate their corporate responsibility progress, encouraging and supporting your employees to make the move to electric is also likely to be very well met by your stakeholders and customers.

It lowers ‘grey fleet’ risks

Employees own vehicles used for business purposes are known as ‘grey fleet’. This can be a tricky issue for employers as all businesses have a legal obligation to ensure that employee-owned vehicles used for work related travel are properly maintained and legally compliant.

Grey fleet has become an even hotter during the pandemic as many employees are now working from home, and any trip to the office may be classified as business travel and not as a commute. And those who would have opted for public transport may be more inclined to get behind the wheel of their own car. EV salary sacrifice schemes can provide a solution to this with employees offered access to a vehicle is fit for use, fully maintained and most modern safety features.

It helps businesses recruit and retain the best talent

In today’s job market, employee benefits play a key role in an employee’s decision to accept or reject a job offer – with over three quarters of employees saying that it’s very or extremely important in their decision making. An attractive benefit package is also essential in retaining the best talent as employees may be tempted to stray if they get a better offer. This is become even more important for HR bosses in the wake of the coronavirus pandemic, with 83% saying that they had placed more emphasis on benefits and perks for staff attraction and retention since March 2020.

The future is electric

Despite an increase in home working, employees still need transport options. Now more than ever, people are turning to private transport rather than public for their own safety. EV salary sacrifice schemes not only give employees options that suit their sustainable and cost-conscious requirements in this new world where EVs are soon to become the norm, but offer employers cost savings and environmental benefits to add to their CSR initiatives.

For information on LeasePlan’s SalaryPlan, visit:



We use cookies to give you the best online experience. By agreeing you accept the use of cookies in accordance with our cookie policy.

Back To Top