Salary sacrifice: EV scheme for employees

If you haven’t heard of a salary sacrifice scheme, it’s essentially a way for employers to offer their employees different perks, which are paid for out of the employee’s salary. Payments are deducted before tax, so the total cost is lower than if the employee was to purchase the perk themselves.

There are a range of different perks employers can choose to offer, ranging from pension contributions to childcare vouchers to mobile phones and other technology, but the one we’re interested in is, of course, EVs.

How does EV salary sacrifice work?

The employer works with a third-party company to create a list of pre-approved EVs. The choice of EVs will depend on the scheme provider, but most have a wide range that can even include Tesla, Mercedes and Polestar. Employees have the opportunity to then select a vehicle from this list if they wish to utilise the scheme. The employer is the one who technically leases the EV, but the predetermined cost of the vehicle is deducted from the employee’s salary to cover the cost.

Since each monthly payment is taken before tax, leasing an EV through a salary sacrifice scheme is a more tax-efficient way to lease the vehicle. In fact, the cost of obtaining an EV becomes 30-60% cheaper when leased through a salary sacrifice scheme. This is different to a company car scheme, and leasing an EV this way allows the employee to use it for both business and personal purposes.

The lease agreement usually runs between two to four years and often includes insurance, servicing costs, road tax and breakdown cover. This can vary between salary sacrifice providers.

If an employee with a salary sacrifice EV is to leave their place of employment, the vehicle does need to be returned to the provider. In some instances, the employee may be required to pay a fee, or the employer may be responsible, or in other cases, any outstanding funds may be cancelled out by the salary sacrifice provider. This will vary depending on the provider and the circumstances under which the employee has left.

Are they worth it?

EV salary sacrifice schemes have benefits for both the employer and employees.

Employer benefits:

• The company becomes more attractive to potential employees
• Reduce the company’s carbon footprint
• Lower national insurance contributions

Employee benefits:

• Obtaining an EV for both business and personal use at a discounted rate
• Insurance, servicing and road tax costs covered
• Lower national insurance contributions

EV salary sacrifice providers

If you’re an employer looking to offer an EV salary sacrifice scheme to your employees, here are some examples of providers:

• The Electric Car Scheme
• Loveelectric
• FleetEvolution
• Octopus
• Tusker

These are just a few examples as there are a range of companies out there that provide an EV salary sacrifice scheme. Take the time to look into the available options and what each provider offers to find the best fit for your business.

Once you have your scheme up and running, your employees would appreciate the ability to charge their EVs at work. There are government grants available to assist with the cost of buying and installing EV chargepoints for your business. Check your eligibility for these grants with our quick online quiz. Contact us to find out how we can provide EV charging infrastructure to your workplace.

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