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Find the Best EV Salary Sacrifice Scheme for 2024

Learn about the schemes that make EVs even cheaper!
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Summary
  • EV salary sacrifice schemes allow employees to drive a new electric car for considerably less money than PCP or leasing, by reducing their taxable income.
  • Such car schemes can also help employers attract and retain talent, improve their corporate social responsibility and reduce their overall carbon footprint.
  • Some providers offer more flexibility than others in terms of contract length, mileage allowance, optional charging extras, car swapping and early termination options.
  • Subscribing to a car and paying for it through your salary is one of the most cost-efficient, flexible ways to drive an EV. The major players in this space are elmo, Onto and Voltric.
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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 “sal-sac” 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:

  • The introduction of valuable Benefit-in-Kind (BiK) tax savings for low-emission cars, which make electric car drivers pay less income tax and National Insurance.
  • The environmental and social benefits of driving an electric car include reducing carbon emissions, improving air quality and supporting green initiatives.
  • The improved corporate image that comes with a fleet of zero-emissions electric vehicles can enhance employee morale and attract customers.
  • The reduced fuel costs and no upfront costs for leasing an electric car, which can save money on monthly outgoings.
  • The ongoing cost of living crisis pushes people to find even more ways to save their hard-earned cash.

The best EV salary sacrifice schemes in the UK

What are EV salary sacrifice schemes?

Electric car ‘sal-sac’ schemes allow employees to pay for an electric car out of their gross monthly pay. This means they can save on income tax and national insurance payments and enjoy cheaper monthly car payments.

These EV schemes work the same way as other salary sacrifice incentives like cycle-to-work, childcare, and pension schemes. It's essentially leasing a car and paying through before you get taxed.

The flexibility and convenience of a car subscription service, which typically includes insurance, maintenance and breakdown cover costs, has also exploded in demand over the past few years. This new way of running a car is now also available through salary sacrifice schemes.

The providers currently allowing you to subscribe to an EV and pay through your employer include elmo and Onto.

Average saving for salary sacrifice electric car

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.

  Hyundai KONA
(Premium)
Audi e-Tron
(50 S Line)
Tesla Model 3
(Long Range)
Annual salary £40,000 £60,000 £80,000
Monthly car payment £613 £940 £723
Term length 36 months 36 months 36 months
Salary sacrificed -£613 -£940 -£723
Income tax saved £123 £350 £289
Income tax on vehicle benefit -£15 -£30 -£40
NIC saved £74 £32 £14
Net pay reduction -£431 -£588 -£459
Saving of total car cost 29% 37% 36%

Please note these are estimated calculations. Your personal case is likely to be different.

The best salary sacrifice electric car schemes currently on the market

Let’s explore the best EV salary sacrifice providers in 2023. 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.

The Electric Car Scheme

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 Onto and also 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 *.

Octopus

What we like: Octopus 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 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 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 *.

elmo

What we like: elmo offers a very quick 7-day vehicle delivery. Also, the nature of car subscriptions means you don’t have to worry about the cost of maintenance, insurance or breakdown covers. Plus, they also handle the paperwork and HMRC admin.

elmo offers an all-inclusive EV subscription scheme which includes 800 miles per month, comprehensive insurance cover, scheduled maintenance and servicing, 24/7 roadside assistance, vehicle excise duty and congestion charges, and driver safety telematics. 

To be considered a benefit by HMRC, the subscription must be maintained for a minimum of 12 months, which can be cancelled with 30 days' notice after that period.

elmo offers additional options such as extra mileage, up to two additional drivers, and a range of charging options via elmoCharge. In fact, you can add credit to your elmoCharge card which is added on your fixed monthly subscription payment. This way you can save between 30% - 60% on the cost of public EV charging.

They can handle all the paperwork and HMRC admin to make the sal-sac process as easy as possible. It’s worth mentioning that there’s no net cost to the employer for elmo operating their scheme. Elmo don't currently accept new customers.

Onto

What we like: Onto’s mission is to put more electric cars on the road, and it’s hard to find a subscription service that’s more flexible. Even via salary sacrifice, the minimum employee commitment is 1 month with all car costs included. 

Onto’s salary sacrifice scheme is a way for employees to subscribe to an electric car as an employee benefit and save on tax. The companies which can offer this to their employees are getting access to Onto’s subscription service which includes insurance, maintenance, breakdown cover and public charging.

The scheme was launched in December 2022, and Onto is partnered with The Electric Car Scheme to offer this new service. As standard, the cars through Onto’s scheme come with 750 miles per month, don’t require a deposit and one month minimum commitment. 

If you decide to move companies, returning the car is easy and will be handled by your company and Onto’s dedicated account manager. 

Some highly sought-after EVs offered under this scheme include Kia e-Niro, Audi e-Tron 55 Quattro, Volkswagen ID.3 and Tesla Model 3 Long Range. 

Onto doesn't currently accept new customers as they have entered into administration.

Fleet Evolution

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.

Tusker

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.

WeVee

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.

Zenith

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.

LeasePlan

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.

Fleet Alliance

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.

Go Green

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.

Car subscription via salary sacrifice

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.

Polestar 2 SM Plus on £40,000 salary

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.

Vauxhall Mokka-e Ultimate on £40,000 salary

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.

Tesla Model 3 Performance on £40,000 salary

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.

Peugeot e-2008 GT Premium on £40,000 salary

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.

Is salary sacrifice for an EV worth it?

It can be worth it if you want to drive a new electric car for less money than other financing options.The saving comes from reductions in national insurance contribution and income tax. If your current employer has already signed up for a scheme, and you’re already in the market for a new car anyway, then it’s definitely worth having a chat with your company. 

However, such electric car programmes may not be suitable for everyone. There are a few things to remember when deciding:

  • Your employer needs to offer a salary sacrifice scheme for EVs, and you need to meet their eligibility criteria. Otherwise, it may be difficult to persuade them to start offering it.
  • Your salary after sacrificing a portion for an EV should not fall below the minimum wage or affect your pension contributions.
  • Your choice of EVs may be limited by the availability and budget of your employer’s scheme.
  • You may have to pay extra fees for insurance, maintenance, mileage or early termination of the lease contract. Unless you pick a car subscription service which takes care of most of these.
  • You may lose some benefits or entitlements that are based on your gross income, such as maternity pay or tax credits.

Salary sacrifice electric cars for the NHS

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. 

FAQs

How does an EV salary sacrifice scheme work?

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. 

Which electric cars qualify for the salary sacrifice scheme?

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:

  • Tesla Model 3 - A popular electric car with a range of up to 360 miles, a BiK tax rate of 1% in 2023/24 and 2% in 2024/25, and an average monthly lease cost of around £550.
  • Audi e-tron - A luxury and spacious electric vehicle with a range of up to 249 miles, a BiK tax rate of 1% in 2023/24 and 2% in 2024/25, and a monthly lease cost of around £700.
  • VW ID.3 -  A compact and affordable electric hatchback with a range of up to 263 miles, a BiK tax rate of 1% in 2023/24 and 2% in 2024/25, and a monthly lease cost of around £400.
  • Hyundai Kona Electric - A stylish and practical electric crossover with a range of up to 300 miles, a BiK tax rate of 1% in 2023/24 and 2% in 2024/25, and a monthly lease cost of around £350.
  • Nissan Leaf - A reliable and efficient electric hatchback with a range of up to 239 miles, a BiK tax rate of 1% in 2023/24 and 2% in 2024/25, and a monthly lease cost of around £310.
  • Kia e-Niro - A spacious and versatile electric SUV with a range of up to 282 miles, a BiK tax rate of 1% in 2023/24 and 2% in 2024/25, and a monthly lease cost of around £450.

Can anyone get an electric car on the salary sacrifice scheme?

An EV salary sacrifice scheme comes with certain conditions and limitations that apply to both employers and employees.

Employers need to:

  • Set up a salary sacrifice arrangement by changing the terms of their employee’s employment contract with their consent.
  • Rent or lease an electric car from a supplier and offer it to their employee as a non-cash benefit.
  • Pay for the lease cost, insurance, maintenance and other expenses related to the electric car.
  • Report the salary sacrifice arrangement to HMRC
  • Deduct tax and National Insurance contributions accordingly.

Employees need to:

  • Agree to give up part of their gross salary in exchange for an electric car.
  • Choose an electric car that is available in their employer’s scheme and meets their needs and budget.
  • Be aware of the impact of salary sacrifice on their pension contributions, tax credits, student loan repayments and other benefits.
  • Pay for parking fees and any fines or charges related to the electric car.

Therefore, anyone who wants to get an electric car on the salary sacrifice scheme should check with their employer if it’s available to them, what models they have in their scheme, how much the monthly cost could be and how it would affect their income and benefits. 

The challenge is that companies would only be signed up to one scheme, which means employees will have to rely on that one scheme's cars and rules and won’t be able to compare many different options. 

What are the benefits of an electric car salary sacrifice scheme for employers?

An electric car salary sacrifice scheme can have several benefits for employers, including:

  • Hitting your sustainability goals as an employer. An EV scheme helps your business to reduce its carbon footprint, at no cost to the company.
  • Saving on National Insurance Contributions. As an employer, you can save 13.8% of the amount sacrificed by your employees for an electric car lease.
  • Retaining and attracting top talent with a boost to your benefits package. In fact, 75% of employees are more likely to stay with their employer because of their employee benefits package, according to Octopus Energy.
  • Offering an electric car salary sacrifice scheme can enhance your reputation as a progressive and environmentally conscious employer.

However, there may also be some factors companies need to consider as well:

  • The impact on employee’s entitlements or benefits that are based on their gross income, such as pension contributions, maternity pay or tax credits - You should inform your employees about these potential implications and advise them to seek independent financial advice before joining a scheme.
  • The availability and budget of suitable electric cars for your employees - You may have to limit the choice of electric cars that your employees can lease based on your scheme’s eligibility criteria and affordability.
  • The legal and contractual obligations that come with leasing an electric car for your employees -  You should ensure that you have a clear and comprehensive agreement with both the leasing company and your employees that covers all aspects of the lease contract, such as insurance, maintenance, mileage, early termination fees etc.

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.

How long does it take for a business to get salary sacrifice live?

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. However, elmo claims a business can be up and running within a week, and employees can start receiving their cars after another seven days. 

Browse all cars available on subscription

There are hundreds of cars available via UK subscription companies.

Article sources
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