Everything You Need to Know About EV Salary Sacrifice Schemes
9 May 2025
The shift towards electric vehicles (EVs) is accelerating amid Government regulations, environmental concerns, and NIC increases. A green car salary sacrifice scheme or EV company car scheme can deliver thousands of pounds in National Insurance savings annually, helping businesses reduce their outgoings and free up cash to reinvest in sustainable growth. With Benefit in Kind (BiK) rates for EV car schemes still significantly lower than petrol and diesel cars, now is the perfect time for companies to adopt or expand their salary sacrifice offering. Read on to discover everything you need to know about EV salary sacrifice schemes.
For a deeper dive into the role that salary sacrifice, including electric car schemes, has in reducing employer National Insurance Contributions (NIC), read our blog, ‘Salary Sacrifice and Your Business Cost-Savings Strategy’. You’ll discover the savings potential for your people and business and how you can reinvest them to create an employee-retaining Employee Value Proposition (EVP).
What is an EV Salary Sacrifice Scheme?
An EV salary sacrifice scheme is more than just a way to help employees afford an electric or low-emission car. Employees save money as the salary sacrifice arrangement reduces their Income Tax and NI Contributions.
Beyond tax savings, employees can access brand-new, fully maintained and insured cars at corporate rates, potential VAT efficiencies, and no upfront costs.
Employees enjoy peace of mind knowing that everything’s covered! The fixed monthly cost - repaid through salary sacrifice - includes fully comprehensive car insurance, total loss protection, road tax, breakdown cover, MOT, maintenance, replacement tyres and accident assistance.
Employer Benefits of Electric Car Salary Sacrifice Schemes
Our EV car scheme partners, Tusker, joined us on a podcast about busting myths. One topic covered is how EV car schemes are a ‘big ticket’ employee benefit.
We definitely see retention as a key attraction for employers. From our perspective, we see around 73% of people who have had a green car or car on the scheme go onto another car.” Ali Argall, Tusker
Employees want their employer to offer the scheme, and once they have one, they’re likely to take on another, meaning the employer NIC savings continue to flow in.
Below are a few reasons why employers should consider embedding an EV salary sacrifice scheme:
- Attract and retain talent: Offering EVs as an employee benefit enhances your company’s EVP.
- Support sustainability goals: Reduce your corporate carbon footprint and align with environmental targets.
- Significant tax and NI savings: Lower NIC costs create financial efficiencies for your business to keep or share with your employees to enhance value further.
- Minimal administration: Partnering with an experienced provider ensures seamless scheme management.
- Risk protection: Including employee departures, redundancy, parental leave, and long-term sickness.
Did you know that if just 30 of your employees enrolled on our Green Car salary sacrifice scheme, it could generate more than £100,000 in class 1 employer NIC savings (salary dependent)?
The more employees that take up our Green Car scheme = the more savings for your business!
Employee Benefits of Electric Car Salary Sacrifice Schemes
A new car, an all-inclusive support package, and, as Natalie Parkin shares in our podcast, never having to worry about a flat tire again! We’ve touched on the benefits of this big-ticket perk already, but break it down more clearly below:
- Lower monthly costs: Drive a brand-new EV at lower amounts than on a private lease.
- Low Benefit in Kind tax: Fixed at just 3% BiK for fully electric vehicles in 2025, rising slowly by 1% annually until 2027/8 and 2% annually until 2029/30.
- Reduced running costs: Save on insurance, fuel, servicing, and maintenance across the term.
- All-inclusive package: Typically, we include insurance, servicing, breakdown assistance, and road tax.
What do these reduced running costs look like in real money? Let’s review a VW Golf 1.5 TSI.
- Driving this car 10,000 miles per year would cost approximately £1,491 in fuel.
- Compare that to one of VW’s EV cars, the VW ID3, which, when driving at the same distance, would cost approximately £741 in charging fees.
That’s a £750 reduction in running costs, and the savings don’t end there!* With BiK rates set at 3% for EVs in 2025 (rising gradually towards 2030) and ongoing savings on running costs, implementing an EV salary sacrifice scheme has never been more beneficial. Companies that act now will save on costs for their employees and position themselves as leaders in sustainability and employee benefits.
Read our blog, ‘What Are Fringe Benefits for Employees?’ to learn more about BiK and when it applies to employee car schemes.
Busting Myths: The Truth about Electric Cars
Some people have previously hesitated to switch to electric due to concerns over range and charging times, particularly those who travel long distances. We busted many myths in our podcast, which is why we called it ‘The Hype, The Money, The Truth’, and we touch on some of the main concerns your employees may have below.
Charging Points
34% of non-EV drivers believe that the charging network isn’t yet at a point where it will meet their needs (EV Driver Survey Report 2023).
The stats coming from EV owners paint a different story, and…
- 91% of EV drivers wouldn’t go back to a petrol or diesel car.
- 91% of EV drivers are satisfied or very satisfied with their vehicle.
The UK now boasts over 70,000 public charging points**, with rapid chargers widely available, particularly across the motorway service station network. Home charging solutions and workplace charge point installations further ease concerns. 75% of EV car drivers use public charging once per month or less, with most of their charging happening at home.
Another top tip from our podcast… Some energy companies will pay EV users to charge their cars during certain hours!
Range Anxiety
Is the distance your employees travel still an issue?
EV technology is evolving rapidly, and the average car can now cover nearly 300 miles on a single charge. For context, 300 miles from London would take you to parts of Wales, Scotland - significant trips.
On average, Brits drive 135 miles per week, which could see EV car owners only having to charge their cars every other week.
EV Car Options
Our Green Car Salary Sacrifice Scheme opens your employees up to a wide range of models, including Battery Electric Vehicles, self-charging hybrids (known as mild hybrids) and PHEVs (plug-in hybrid electric vehicles).
A car to meet every need!
This variety means drivers who tend only to make short, local journeys, and those who cover longer distances can pick the best options for their needs.
Here are some of the team’s favourites:
VW ID.7
- Range = 435 miles
- Standout Features = Front massage seats
- Best Bits = Heads-up display
Kia EV3 and EV6
- Range = 369 miles
- Standout Features = Heated steering wheel and front seats
- Best Bits = Dynamic styling
BYD Seal
- Range = 354 miles
- Standout Features = Rotatable centre touchscreen
- Best Bits = Very comfortable and high level of specification
BMW iX3
- Range = 285 miles
- Standout Features = WhatCar? Car of the Year in 2022
- Best Bits = Panoramic sunroof
Range, comfort, top tech, savings for all, and peace of mind!
80% of petrol or diesel drivers say they would choose an EV car, if available through a salary sacrifice scheme, because of the additional tax and NI savings (EV Driver Survey Report 2023).
Electric Car Salary Sacrifice Schemes & Your CSR Credentials
Salary sacrifice is an effective way to make employee benefits cost-neutral, using the savings to fund further employee wellbeing initiatives. Discover more in our blog, ‘Salary Sacrifice and Your Business Cost-Savings Strategy’.
Beyond that, they’re an impactful way to bolster your CSR credentials, and here’s why that matters:
- Millennials will make up 75% of the global workforce by 2025, and they’re looking for socially responsible employers (Team Stage).
- 93% of employees believe companies must lead with purpose (Porter Novelli).
- 90% of employees who work at companies with a strong sense of purpose say they’re more inspired, motivated, and loyal (Porter Novelli).
- 64% of young people don’t think the government is doing enough to avoid a climate crisis and expect their employers to act responsibly.
Consumers, clients, partners, and even potential employees are making sustainability-driven choices. How your workforce commutes to the office or travels for business forms part of your organisation’s carbon footprint. Helping your employees adopt greener, more energy-efficient transport reduces your output, enhancing your ever-important CSR credentials.
A Trusted Partnership with Pluxee UK
It’s clear that electric car salary sacrifice schemes benefit employees and employers, but one question remains… What makes us different?
With our Green Car salary sacrifice scheme, you can:
- Purchase any make or model of EV car, and vehicles in stock are available immediately.
- Use an intuitive quotation platform to pre-order, post-order and in-life support - it’s all delivered by UK-based employee and driver support teams.
- Mitigate the risk to your business in scenarios such as resignation, redundancy, retirement, and TUPE. You can also make provisions for maternity, paternity and shared parental leave alongside long-term sickness and a wide variety of health-related scenarios that may impact an employee’s salary.***
- Be inclusive of lower earners within your organisation by extending your Green Car salary sacrifice scheme to low and ultra-low-emission cars as well as zero-emission EV cars.
EV cars are on the rise. They’re good for our planet and finances, which is particularly important during times of crisis when every penny counts. The reality is that an employee could purchase or lease an EV car directly from a distributor. As an employer, you don’t need to be involved in the process, but… why wouldn’t you want to be when you can make such substantial savings?
Become an employer that delivers the benefits and perks its employees want and reap the benefits that follow.
Notes:
* Tusker
** Zap Map source
*** Carbon offsetting disclaimer. Terms and conditions apply
Sources: EV Driver Survey Report 2023, Team Stage, Porter Novelli, CNBC.
