Electric Vehicle Salary Sacrifice Scheme
An electric car salary sacrifice scheme – also known as an EV SalSac – is set up by employers to let staff set aside a portion of their salary, before it’s taxed, to go towards leasing an electric car.
Just like any other method of car leasing, those on the scheme have two options at the end of their lease agreement. Employees can either give the car back at the end of the lease period and end the agreement or trade it in for an updated model.
Find out all the details on how choosing an EV on Salary Sacrifice could be the best lease option for you!
Table of contents
- How does electric car salary sacrifice work?
- Do employees still need to pay tax?
- What are the benefits of electric car salary sacrifice schemes?
- How much can employers save on electric car salary sacrifice schemes?
- How much can employees save on electric car salary sacrifice schemes?
- Frequently asked questions (FAQs)
- Electric car salary sacrifice schemes with Select Car Leasing
Want to know more about our electric vehicle salary sacrifice scheme?
How does electric car salary sacrifice work?
The electric car Salary Sacrifice scheme is the most tax-efficient way of leasing an electric car.
Here's how it works. Firstly, an employer leases a car from a third-party leasing company via Select. They then offer them to their employees under the scheme. Employees can then pick the vehicle they like best and that suits their needs and budget.
To cover the cost of an electric car, employees agree a portion of their salary to get taken each month before tax. Servicing costs and car insurance are included in the scheme and are covered in the monthly repayment fees.
It's important to note that electric car Salary Sacrifice schemes differ from company car schemes – where the company pays for an employee's car for them. With an EV SalSac scheme, the vehicle is still in the employer's name and funded by them – but it helps employees save a significant amount on tax.
The owners of company cars and cars on electric car Salary Sacrifice schemes still have to pay an additional cost – known as a Benefit-in-Kind. This cost is fixed at 2% until April 2025 when it is set to increase by 1% each year until 2028 (3% in 2025/6, 4% in 2026/7, 5% in 2027/8).
View our full breakdown of how company car tax works.
Those on an electric car salary sacrifice scheme can enjoy potentially hundreds of pounds off the price of a new electric car in tax savings.
Electric car salary sacrifice – an example in practice
Take this scenario, for example. A business is looking to offer the electric car salary sacrifice scheme to interested employees and contacts Select Car Leasing, which agrees to lease them a fleet of new, all-electric vehicles.
An employee decides they're in the market for a new EV. They sign onto the scheme and settle on a brand-new Tesla Model Y.
By going through the scheme, employees can save up to 50% on their monthly repayments compared with going directly to a leasing company. In this case, employees only pay between £468.43 and £525.82 a month as opposed to the £833 they would have to expend alone through a traditional PCH agreement.
Employers also save. Because the salary is taken before tax, businesses often pay less on national insurance contributions to their employees. In this instance, the employer that stocked the car saves £114.35 monthly on the NI contributions for this particular transaction.
Do employees still need to pay tax?
Employees don't pay Road Fund License fees (also known as road tax) on vehicles going through an electric car salary sacrifice scheme. This is because Road Fund License is 0 on electric vehicles until at least April 2025.
Plus, Road Fund License fees are covered within lease agreements. So, even if this electric vehicle relief is reviewed, those running a vehicle through a lease agreement are still not expected to pay road tax.
How popular are electric car salary sacrifice schemes?
Electric vehicle salary sacrifice schemes are becoming increasingly popular with companies across the country.
According to recent polls, as many as 53% of UK companies offer their employees some form of electric vehicle salary sacrifice scheme. And with booming markets and the popularity of electric cars only increasing – as well as a looming ban on the sale of new petrol and diesel cars – EV salary sacrifice schemes are only set to become more popular.
What are the benefits of electric car salary sacrifice schemes?
Electric car salary sacrifice schemes boast a range of benefits for both employers and employees that go far beyond just attractive tax savings.
Employers enjoy a range of benefits, including:
- An increase in satisfaction among existing employees and an attractive workplace perk to entice new starters
- Lower national insurance costs
- Boosting green credentials by encouraging low-emission motoring and fostering an environment-first mentality throughout the organisation
- Reputation boost through lowering the company’s carbon footprint
- Reduced grey fleet risks (overusing personal cars for workplace purposes)
- The cost-neutral scheme means no additional setup and maintenance costs for the employer
With Select Car Leasing, employees can also enjoy a range of benefits covered within their agreement.
Employees are guaranteed:
- No personal credit checks when signing on
- Low maintenance costs as users only pay a small 2% BIK tax
- Free roadside assistance
- Servicing, maintenance, repairs and tyres covered as standard
- No road tax
- Corporate manufacturer discounts
- Immense savings on tax and national insurance contributions
Find out how an electric car salary sacrifice scheme can benefit your employees by inquiring today on and speaking to a member of our team.
How much can employers save on electric car salary sacrifice schemes?
Employers can save hundreds of pounds per employee on national insurance contributions.
The amount varies depending on the number of employees taking up the scheme, the models they decide to lease, fleet size and many other factors.
However, it's estimated that employers can save around 13.8% in employee national insurance contributions - demonstrating the significant savings available to businesses through a scheme that they then pass onto their employees.
For example, a business offering Electric Car Sal Sac to 50 employees – deducting £6,000 per annum from each payroll – could stand to save £41,400 each year ((£6,000 x 13.8%) x 50).
How much can employees save on electric car salary sacrifice schemes?
Employees looking to lease an electric car are encouraged to do so through an electric salary sacrifice scheme if there's one available to them.
When factoring in the income tax and national insurance deductions and the costs of running a car, employees can save up to 50% on the monthly cost of leasing an electric vehicle compared with going through a traditional PCH scheme.
For example, an employee leasing a Tesla Model Y through the electric car salary sacrifice scheme and Select Car Leasing would only pay between £468.43 and £525.82 a month as opposed to the £833 they would have to expend alone through a traditional PCH agreement.
To access an electric car SalSac scheme, an employer must agree to set up or have one already in place, so that employees can run monthly repayments through their payroll.
Unfortunately, if the scheme isn't in place – or if your company doesn't permit you to use salary sacrifice to pay for an electric car – you won't be able to access the scheme's benefits.
It's not possible to sacrifice your salary for an electric car if you're self-employed either, as it must be set up by an employer.
At Select Car Leasing, we have an extensive range of all-electric vehicles – from smaller, compact vehicles like our Nissan Leaf Hatchback to our extensive range of saloon and estate options including the Audi E-Tron range.
We also stock long-range electric cars including the Tesla Model S, BMW iX and Ford Mustang Mach-E, for those looking to get the most value out of each charge.
Plus, there’s a vehicle for every budget. Find out about the cheapest electric car lease options – eligible for the electric car SalSac scheme – or view our complete range of electric car lease deals today and get a quote instantly.
Electric vehicle salary sacrifice schemes vary from company to company. Differences in fleet offerings mean some providers may allow you to go through a salary sacrifice scheme for new electric vehicles and used cars.
At Select Car Leasing, we offer an extensive range of new electric vehicles to choose from.
Unfortunately, you cannot take out a lease on an electric car under the scheme if your employer doesn't offer it. An electric vehicle salary sacrifice scheme can only work if the money used to fund the car is paid through a registered company payroll – this can only be established by an employer.
Of course, employees can take out a lease on an electric car themselves. However, they'll incur higher prices by not going through an electric salary sacrifice scheme that covers maintenance costs and offers significant tax deductions.
Because the salary sacrifice scheme works through your employer – and fleet options are typically only available for lease – employees usually can't buy a car outright.
Yes, they are worth it. If you're in the market for a new EV, it's the cheapest way to do so.
Those leasing through their employer on an electric vehicle salary sacrifice scheme save up to 50% on income and national insurance deductions and maintenance and repair costs – making them a no-brainer for those looking to enrol.
Prices start at £482.90 per month for leasing a Tesla Model 3 through the electric vehicle SalSac scheme.
However, prices may vary depending on the vehicle's specifications and expected annual mileage.
While there is no longer a government grant available for the purchase of electric vehicles – after the scrapping of the Plug-in Car Grant (PICG) in 2022 – there is still financial support available for those running electric vehicles.
The Electric Car Charging Point Grant offers funding worth up to 75% of the cost of installing a smart charging point at your property, saving drivers money on charging infrastructure and the convenience of charging vehicles at home.
Electric car Salary Sacrifice schemes with Select Car Leasing
There's never been a better time to drive an electric vehicle. That's why Select Car Leasing offers a range of all-new electric vehicles to boost your electric car salary sacrifice scheme.
Partner with us for:
- Flexible options to tailor your package to suit your employee scheme
- No minimum employee take-up
- Dedicated account manager and administrator to support you throughout the scheme
- Market-leading discounts
- A wide range of in-stock specials for quick delivery
If you're looking to kickstart your salary sacrifice scheme and slice carbon emissions with your own all-electric fleet, get in touch today and we can help you get started.
