For HR, reward and sustainability teams, the challenge with employee benefits is rarely finding new ideas. It’s finding benefits that employees genuinely value, don’t create a significant administrative burden and can support wider business objectives at the same time.
That’s one reason Electric Car Salary Sacrifice is getting another look from employers in 2026.
Some businesses previously dismissed EV salary sacrifice because of two fairly understandable concerns: that it would cost the employer money, and that running the scheme would create additional work for HR and payroll teams.
Research among more than 250 senior HR professionals found these assumptions are still widespread, with many expecting an EV salary sacrifice scheme to come with both a financial cost and a significant administrative burden.
The way The Electric Car Scheme operates, however, is designed to address both concerns.
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How can an EV salary sacrifice scheme be cost neutral?
The principle behind salary sacrifice is relatively straightforward. An employee exchanges part of their gross salary for an electric car provided through their employer.
Because the deduction is made before income tax and National Insurance, employees can typically save between 20% and 50% on the cost of an electric car.
Crucially, that saving isn’t being funded by the employer. It largely comes from the tax treatment of salary sacrifice. Employers can also benefit from lower employer National Insurance contributions on the salary being sacrificed.
The Electric Car Scheme can therefore be completely cost neutral for the employer, while giving businesses control over how their National Insurance savings are treated.
The scheme can include:
- New and used electric cars, hybrids and subscription cars
- Maintenance and optional insurance within the package
- The ability to spread the cost of installing a home charger
- Employer control over National Insurance savings
- Uncapped early termination protection from day one
- Life event support for employees
For HR teams that previously looked at EV salary sacrifice and concluded that the numbers didn’t work, it’s therefore worth revisiting the calculation rather than relying on assumptions made a few years ago.
What happens if an employee leaves?
For many employers, this is actually the more important question.
An electric car lease might run for several years, while an employee’s circumstances can change at any point during that period. They might resign, be made redundant, become unable to work or experience another major life event.
That creates a potential mismatch: the employee leaves, but the financial commitment associated with the vehicle remains.
The Electric Car Scheme addresses this through its Complete Employer Protection & Employee Life Event Support. Protection is uncapped and applies from the first day of the scheme.
It can cover employment events including resignation, redundancy and dismissal, alongside circumstances such as long-term sickness and parental or family-friendly leave.
Protection can also extend to events outside the workplace, including loss of driving licence, divorce, an involuntary salary reduction, partner redundancy and partner sickness.
This isn’t a theoretical concern. Employers including Holland & Barrett and Dreams have highlighted the protection available as an important factor in their decision to proceed after previously being concerned about potential liability.
The review is designed to establish how the scheme would work within your organisation and where any potential liabilities sit, so you can decide whether EV salary sacrifice is worth taking further.
Can EV salary sacrifice contribute to Net Zero goals?
The conversation around salary sacrifice has also broadened.
It’s no longer solely an employee benefits decision. For organisations working towards ESG or Net Zero targets, employee transport can form part of the sustainability picture too.
When an employee replaces a petrol or diesel vehicle with an EV, the change can contribute towards reducing emissions associated with employee travel and potentially support an organisation’s Scope 3 emissions strategy.
The Electric Car Scheme is B Corp certified, while customers using the scheme have collectively saved an estimated 14,000 tonnes of CO2e. That’s roughly equivalent to the carbon impact associated with planting 650,000 trees.
For sustainability teams trying to turn corporate targets into practical actions employees can participate in, that’s an important distinction. Rather than sustainability being something that only happens at an organisational level, employees can see a direct financial benefit from making a lower-emission choice.
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What about the cost of charging?
The car itself is only one part of the cost of switching to an EV.
Charging is another regular expense, and The Electric Car Scheme has extended the salary sacrifice model through The Charge Scheme.
This allows eligible employees to save between 20% and 50% on EV charging costs, whether they’re charging at home, at their workplace or using the public charging network.
That makes the proposition broader than simply offering employees a discounted electric car. Employers can potentially provide a more complete EV benefit covering both the vehicle and the energy required to run it.
Why reconsider EV salary sacrifice now?
For businesses that investigated EV salary sacrifice previously, the important question isn’t necessarily whether the scheme was right for them then.
It’s whether the reasons they rejected it still apply now.
If the original objection was employer cost, the scheme can be structured to be cost neutral. If it was administrative workload, much of the reporting and payroll process can be managed through the provider. And if the concern was being left with an expensive lease when an employee’s circumstances changed, employer and employee protection has been designed specifically around that risk.
Add the potential employee savings of 20-50% and the contribution towards wider sustainability objectives, and EV salary sacrifice starts to look less like a niche motoring perk and more like a benefit worth putting back on the agenda.
FAQs
Is EV salary sacrifice useful for employee retention?
It can provide employers with a highly visible employee benefit because the financial saving is experienced directly by employees. The Electric Car Scheme’s employer customers report that it can be a useful differentiator when employees compare workplace benefits, while also providing a practical demonstration of the employer’s sustainability commitments.
Will HR and payroll teams have to administer the scheme?
The Electric Car Scheme provides an employer portal for payroll inputs and reporting. It also handles HMRC requirements including P46 (Car) and P11D forms, with employers supported by a dedicated Customer Success Manager.
How much could employees save?
Employees can typically save between 20% and 50% through electric car salary sacrifice, depending on factors including their tax position and the vehicle selected.
Can charging also be paid for through salary sacrifice?
Yes. The Charge Scheme allows employees to save between 20% and 50% on eligible charging costs across home, workplace and public EV charging.
What happens if an employee leaves during the lease?
The Electric Car Scheme provides uncapped early termination protection from day one, alongside Employee Life Event Support covering a range of employment and personal circumstances.