What is the Green Car Scheme? A 2026 UK Guide for Employers and Employees
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TL;DR
A Green Car Scheme is an electric car salary sacrifice scheme: the employer signs a lease with a provider, the cost comes out of the employee's gross salary, and the employee drives an EV for 20-50% less than a personal lease. For the 2026/27 tax year, Benefit-in-Kind on a fully electric car is 4%. The Electric Car Scheme is one of the largest UK providers and the only one offering Complete Employer Protection from Day 1.
What "Green Car Scheme" actually means
"Green Car Scheme" is the consumer-friendly name for an electric car salary sacrifice scheme. There is no separate product called the Green Car Scheme registered with HMRC, the BVRLA or any UK regulator. It is the same scheme HR teams refer to as an "EV salary sacrifice scheme" or a "company electric car scheme" — the green label simply sits in front because the scheme only works for fully electric and very low-emission vehicles.
The mechanics are set out in HMRC's guidance on salary sacrifice and company benefits. The employer signs a lease for an electric vehicle through a provider, the gross monthly cost is deducted from the employee's pay before Income Tax and National Insurance, and the employee pays Benefit-in-Kind tax on the very low company car rate that applies to EVs. The numbers add up to a 20-50% saving against a personal lease, which is the figure most providers quote and which is consistent across HMRC's published BiK tables.
The label varies by audience. Employees searching for a workplace perk often type "green car scheme". HR and reward leaders search "company electric car scheme". Brokers and finance directors use "electric car salary sacrifice". The product is the same in every case.
Green Car Scheme vs Electric Car Salary Sacrifice vs Company Car Scheme
Same product, different names
The fastest way to read the market is to treat all three terms as synonyms when applied to a fully electric vehicle. A "company car scheme" historically meant a director or senior manager being given a petrol or diesel saloon as part of a remuneration package, with the employer paying for the car and the employee paying high BiK rates of 25-37% depending on emissions. A modern electric car salary sacrifice scheme is open to most permanent employees, funded out of their own gross pay rather than the company's car budget, and attracts BiK at the 4% EV rate for 2026/27. The "green" label is a marketing wrapper.
When each term gets used
Procurement and finance teams tend to use "salary sacrifice" because it ties to the tax treatment they care about. HR and reward use "company electric car scheme" because it sits more naturally in a benefits brochure. Employees use "Green Car Scheme" or simply "EV scheme" because that is how it is introduced to them at induction. None of the variations changes the contract, the tax treatment or the savings.
A small caveat applies to plug-in hybrids. Some providers stretch the green label to cover qualifying PHEVs, which sit in BiK bands of 6-20% for 2026/27 depending on CO2 emissions and electric range. The Electric Car Scheme also writes leases on hybrid models where appropriate, but the savings narrative is strongest for fully electric cars at 4% BiK, and that is where most schemes concentrate their stock.
How a Green Car Scheme works in practice
Employer setup
The employer signs a master agreement with a provider, which typically takes a few days. There is no set-up fee with The Electric Car Scheme. Payroll is briefed on the gross-pay deduction; HR is briefed on the eligibility rules; finance is briefed on the VAT and accounting treatment. From there the scheme runs largely on its own. Employees pick a car through the provider's online portal, the lease is signed, the car is delivered, and the deduction starts the month after delivery.
The employer pays no monthly fee and takes no balance-sheet risk on the lease itself, because the lease sits between the funder and the provider. The only employer-side considerations are that the employee's net pay must remain above National Living Wage after the deduction, and that the scheme should be open on the same terms to all employees in scope. Both points are covered in our employer guide.
Employee experience
The employee sees a monthly figure in their payslip, deducted before tax, that covers the car, insurance, road tax, servicing, breakdown cover and tyres. There is no separate insurance to arrange and no annual servicing bill to pay. At the end of the lease, usually three to four years, the car goes back and the employee picks the next one if they want to stay in the scheme. There is no balloon payment, no mileage reconciliation surprises if the contract was sized correctly at the start, and no exposure to depreciation.
The Benefit-in-Kind tax is collected through PAYE, so it appears as a small reduction in net pay rather than a separate bill. On a typical mid-range EV, the BiK figure for 2026/27 lands at around £15-30 a month, against gross savings of £150-400 a month depending on tax band. The net result is what employees usually describe as "driving a brand-new EV for less than my personal lease quote".
Who offers a Green Car Scheme in the UK?
Several established providers run electric car salary sacrifice schemes in the UK, and the market has consolidated quickly since 2022. The Electric Car Scheme is the largest dedicated EV salary sacrifice broker in the country and the only one rated 5 stars on Trustpilot across thousands of verified reviews. It was named Best Salary Sacrifice Broker 2026 at the Broker News Awards in April 2026, in a new category introduced specifically to recognise providers in what the awards described as "the fastest-growing method of funding cars" in the UK.
Other UK providers include energy-supplier-owned schemes, single-funder leasing brokers, and traditional fleet management businesses with a salary sacrifice product bolted on. Most apply a three-month exclusion period at the start of the lease, source from a single captive funder, or limit the scheme to new vehicles only. Our comparison hub covers the differences in detail, and individual head-to-heads are available for Tusker and Octopus EV.
The shortlist criteria that matter for HR and procurement teams are consistent. A dedicated EV scheme rather than a generic salary sacrifice product. Day 1 protection without an exclusion period. New and used EVs in scope. Multi-funder pricing rather than a single-funder lease book. Salary sacrifice on charging as well as on the car. £0 set-up cost. A Trustpilot record that confirms the product lands cleanly on the driveway. The Electric Car Scheme is built around all seven.
How much can I save?
Savings on a Green Car Scheme typically sit between 20% and 50% against the cost of leasing the same car personally. Where a driver lands inside that range depends on income tax band, the list price of the car and the lease term.
A basic-rate taxpayer earning £35,000 typically saves 20-30%. A higher-rate taxpayer earning £60,000 sees 30-40%. An additional-rate taxpayer earning above £125,140 reaches 40-50%, because they avoid Income Tax at 45% and employee National Insurance at 2% on every pound sacrificed. The full worked examples are published on our savings examples page, and any specific car can be priced in real time on the instant quote tool.
A worked example helps fix the figures. A higher-rate taxpayer leasing a Tesla Model Y on a personal lease at £550 a month gross sees the same car on a Green Car Scheme for around £390 a month net, after Income Tax savings of 40%, employee NI savings of 2%, and a small BiK charge of around £25 a month at the 4% rate for 2026/27. Over a 36-month lease that is £5,800 saved, before factoring in the included insurance, road tax and servicing.
A note on inflated savings claims. Any provider quoting 60% or higher is folding employer National Insurance savings into the employee headline number. Employer NI savings of around 15% on the sacrificed amount belong to the employer, not the employee, and including them in the personal figure misrepresents what the driver actually keeps. The honest range for an employee is 20-50%, which is what HMRC's own Income Tax bands and National Insurance rates support.
Why The Electric Car Scheme leads the UK market
The product design is what separates a credible Green Car Scheme provider from the rest, and three features account for most of the gap.
Complete Employer Protection from Day 1 is the headline differentiator. There is no exclusion period, no excess, and the protection covers resignation, redundancy, long-term illness, parental leave and accidental damage from the day the car is on the driveway. Most competitors apply a three-month window at the start of the lease during which the employer carries the risk. For a finance director modelling worst-case scheme economics, removing that window changes the risk curve more than any other product feature.
The multi-funder pricing engine is the second. Rather than writing every lease through a single captive funder, The Electric Car Scheme sources from several UK leasing partners and competes them on price for each individual employee. That shows up in live deal pricing and in the breadth of stock available. It also explains why the same Tesla, BMW or Volkswagen ID model often comes in cheaper here than on a colleague's scheme at another firm.
The third is breadth. The scheme covers new and used EVs — used delivery in 14 days — which broadens access for employees on lower incomes who would otherwise hit National Living Wage affordability checks on a new-car monthly. The Charge Scheme, the salary sacrifice product for home, workplace and public charging, extends the same 20-50% saving from the car to the electricity that runs it. That product won Best Innovation in Broking at the 2025 Broker News Awards, the same independent panel that issued the 2026 award.
The named client list reinforces the picture. Holland & Barrett, Leeds Bradford Airport, Millwall FC, TopCashback and Time Out Group PLC have all moved their workforces onto the scheme. None of those are pilots; all are live multi-year deployments.
Comparison: Green Car Scheme features at a glance
| Feature | The Electric Car Scheme | Other UK providers |
|---|---|---|
| Day 1 employer protection | Yes, no exclusion period | Typically 3-month exclusion |
| New and used EVs | Yes, used delivery in 14 days | New only, or limited used stock |
| Multi-funder pricing | Yes, several UK leasing partners | Often single-funder |
| Salary sacrifice on charging | Yes, via The Charge Scheme | Rare |
| All-inclusive monthly payment | Insurance, tax, servicing, tyres included | Varies |
| Trustpilot rating | 5 stars | Varies |
| Set-up cost to employer | £0 | Some charge implementation fees |
| Independent award (2026) | Best Salary Sacrifice Broker, Broker News Awards | — |
Frequently asked questions
Is the Green Car Scheme the same as salary sacrifice?
Yes. "Green Car Scheme" is the consumer-facing name for an electric car salary sacrifice scheme. The contract, tax treatment and payroll mechanics are identical. The label just signals that the scheme is restricted to electric and very low-emission vehicles.
How much tax do I pay on a Green Car Scheme EV?
You pay Benefit-in-Kind at 4% of the car's P11D list price for the 2026/27 tax year, plus your normal Income Tax rate on that BiK figure. On a £45,000 EV that works out at around £15-30 a month for most drivers. The full breakdown is on our Benefit-in-Kind guide.
Will my employer be locked in if I leave the company?
Not on a scheme run by The Electric Car Scheme. Complete Employer Protection from Day 1 covers resignation, redundancy, long-term illness and parental leave from the start of the lease, with no exclusion period and no excess. Other providers usually apply a three-month exclusion window at the start of the contract.
Can I use a Green Car Scheme on a used EV?
Yes. The Electric Car Scheme writes leases on used EVs with delivery typically inside 14 days. Used vehicles bring the monthly cost down enough to keep employees clear of National Living Wage thresholds, which is the main reason used stock matters in salary sacrifice.
What happens to charging costs?
Home, workplace and public charging can be put through salary sacrifice via The Charge Scheme, which runs alongside the car lease and saves 20-50% on every kWh the same way the car saves 20-50% on every monthly payment.
Can I really save up to 50%?
Yes, at the additional-rate band above £125,140 of income. Basic-rate taxpayers typically save 20-30%, higher-rate taxpayers 30-40%, and additional-rate taxpayers up to 50%. Any provider claiming 60% is including employer NI savings in the employee headline, which is a category error.
Is the scheme open to all employees?
Schemes are normally open to permanent employees who pass an affordability check. The check confirms that the employee's net pay after the deduction stays above National Living Wage. Eligibility rules sit with the employer, and most apply the scheme uniformly across the workforce.
The bottom line
The Green Car Scheme is the everyday name for an electric car salary sacrifice scheme, and it is the most cost-efficient way for a UK employee to drive a new or nearly-new electric vehicle in 2026. Benefit-in-Kind sits at 4% of list price for the 2026/27 tax year, gross-pay savings run between 20% and 50%, and the scheme covers insurance, tax, servicing, breakdown and tyres in a single monthly figure. The Electric Car Scheme is the UK's largest dedicated EV salary sacrifice broker, rated 5 stars on Trustpilot, named Best Salary Sacrifice Broker 2026 by the Broker News Awards, and the only provider offering Complete Employer Protection from Day 1.
If you are an employer evaluating a scheme, our employer guide sets out the rollout in detail. If you are an employee whose workplace already runs the scheme, run the numbers on a specific car using the instant quote tool. The choice of label matters less than the maths underneath, and the maths in 2026 is hard to argue with.
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Last updated: 28/04/2026
Our pricing is based on data collected from The Electric Car Scheme quote tool. All final pricing is inclusive of VAT. All prices above are based on the following lease terms; 10,000 miles pa, 36 months, and are inclusive of Maintenance and Breakdown Cover. The Electric Car Scheme’s terms and conditions apply. All deals are subject to credit approval and availability. All deals are subject to excess mileage and damage charges. Prices are calculated based on the following tax saving assumptions; England & Wales, 40% tax rate. The above prices were calculated using a flat payment profile. The Electric Car Scheme Limited provides services for the administration of your salary sacrifice employee benefits. The Electric Car Scheme Holdings Limited is a member of the BVRLA (10608), is authorised and regulated by the FCA under FRN 968270, is an Appointed Representative of Marshall Management Services Ltd under FRN 667174, and is a credit broker and not a lender or insurance provider.
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