How EV Salary Sacrifice Can Cut Emissions, Boost Employee Benefits, and Drive Your Net Zero Goals
We've recently teamed up with Furthr as one of our sustainability partners. This partnership is particularly exciting because it helps our clients address their emissions reduction targets through electric vehicle adoption. As fellow B Corps, both The Electric Car Scheme and Furthr are committed to using business as a force for good, and our collaboration provides companies with powerful tools to reduce their carbon footprint while enhancing employee benefits.
Who We Are
At The Electric Car Scheme, we make electric cars affordable for everyone through salary sacrifice. Our solution enables employees to save 20-50% on any electric car, supporting both financial wellbeing and environmental responsibility. We've helped thousands of employees across the UK transition to electric vehicles through their workplace benefits packages, creating meaningful emissions reductions while delivering significant savings.
Our new partner Furthr specialises in helping businesses measure, reduce, and offset their carbon emissions on their journey to net zero. They provide comprehensive carbon accounting solutions and actionable strategies to help companies understand and reduce their environmental impact across all scopes of emissions.
In this article, we'll explore how and why electric vehicles are a key part of accelerating the transition to a low-carbon world, and how you can help your team participate in this transition while reducing your scope 3 emissions at no additional cost to your business.
Do Electric Cars Really Produce Fewer Emissions?
The environmental benefits of electric vehicles (EVs) compared to traditional petrol or diesel cars are substantial, though misconceptions persist in the public discourse. When examining the full climate impact of vehicles, we must consider the entire lifecycle emissions from manufacturing through to disposal. Electric cars do typically generate more emissions during production than conventional vehicles, primarily due to the energy-intensive process of manufacturing batteries. However, this initial carbon cost is quickly offset by the significantly lower operational emissions throughout the vehicle's lifespan.
Research from the International Council on Clean Transportation shows that even when accounting for more carbon-intensive manufacturing, electric cars in the UK produce approximately 50% less CO2 over their lifetime compared to petrol vehicles.
This advantage continues to improve as our electricity grid becomes increasingly powered by renewable sources. In 2024, over 40% of the UK's electricity generation comes from renewable sources, a figure that continues to grow year on year.
The common claim that electric vehicles merely shift pollution from roads to power plants overlooks the inherent efficiency advantages of electric motors. Even when charged using electricity from a grid that includes fossil fuel generation, EVs convert energy to motion far more efficiently than internal combustion engines, which waste approximately 70% of their energy as heat. This fundamental efficiency difference means that even with a mixed electricity grid, electric vehicles produce fewer emissions per mile than their petrol counterparts.
Modern EV batteries are also increasingly recyclable, with major manufacturers implementing take-back and recycling programmes to recover valuable materials at the end of battery life. This developing circular economy for batteries promises to further reduce the lifetime environmental impact of electric vehicles in the years ahead.
How Long Does It Take for an Electric Car to Offset Its Carbon Footprint?
The time required for an electric car to offset its initial manufacturing emissions through cleaner operation—often referred to as the "carbon payback period"—varies depending on several key factors. The emissions intensity of the electricity used for charging plays a significant role; drivers charging their vehicles with renewable energy will see a much faster carbon payback. Annual mileage is another critical factor, as higher-mileage drivers will accumulate emission savings more quickly compared to those who drive less frequently. The comparison vehicle also matters substantially—replacing a large, inefficient SUV with an electric vehicle will yield faster carbon benefits than replacing an already efficient small petrol car.
In the UK context, with our increasingly renewable-powered grid, research indicates that the carbon payback period typically ranges from 1.5 to 3 years for new electric vehicles. For commuters and other high-mileage drivers, this period can be even shorter, sometimes less than 18 months. This relatively short payback period means that electric vehicles quickly become the more environmentally friendly option, continuing to deliver emissions benefits throughout their operational life.
Used electric cars present an even more compelling environmental proposition. When purchasing a used EV, much of the manufacturing emissions have effectively been amortised during the vehicle's first ownership period. This means the carbon payback period for a second or third owner is dramatically shortened, sometimes to just a few months of driving. By extending the useful life of existing electric vehicles, used EV adoption maximises the environmental return on the resources already invested in manufacturing. This is why The Electric Car Scheme offers both new and used electric vehicles through our salary sacrifice scheme, allowing employees to choose the option that aligns best with their environmental goals, driving needs, and budget considerations.
How Do Electric Cars Fit Into Company Emissions Reduction Strategies?
Electric vehicles can serve as a cornerstone of your company's carbon reduction strategy, addressing multiple aspects of your emissions profile. For organisations that maintain a corporate fleet, transitioning these vehicles to electric alternatives represents a straightforward way to reduce direct emissions. This transition affects Scope 1 emissions for company-owned vehicles and can deliver not only environmental benefits but also notable cost savings through reduced fuel expenses and lower maintenance requirements.
However, a less obvious yet potentially more substantial opportunity lies in addressing employee commuting emissions. For many organisations, especially those with office-based workforces, employee commuting constitutes a significant portion of their carbon footprint. These emissions fall under Scope 3 (indirect emissions in your value chain), which often represents the largest and most challenging category of emissions to address. Despite their significance, commuting emissions have traditionally been difficult for employers to influence, making them a persistent challenge in comprehensive sustainability strategies.
This is where electric car salary sacrifice schemes offer a unique advantage. By facilitating employee transition to electric vehicles through salary sacrifice arrangements, employers can meaningfully reduce their Scope 3 emissions while simultaneously providing a valuable financial benefit to their workforce. The electric car salary sacrifice scheme creates a rare win-win scenario where both environmental and employee welfare objectives are advanced through a single initiative.
Understanding Scope 3 Emissions and the Role of Commuting
Scope 3 emissions encompass all indirect emissions that occur in a company's value chain, from purchased goods and services to waste disposal and, critically, employee commuting and business travel. While regulatory requirements for Scope 3 reporting are still evolving, forward-thinking organisations are already measuring and addressing these emissions in anticipation of more stringent reporting frameworks. Our partner Furthr specialises in helping companies accurately measure and understand these complex emissions sources.
When employees participate in The Electric Car Scheme, the accounting for emissions becomes more nuanced but ultimately represents a significant reduction opportunity. The lifecycle emissions of the electric vehicles themselves would be accounted for under Category 2 (Capital Goods) in Scope 3 reporting. Meanwhile, the emissions from employee commuting would remain categorised under Scope 3 commuting but would show meaningful reductions compared to petrol or diesel alternatives. If employees use their salary sacrifice vehicles for business travel that is expensed to the company, those specific journey emissions would be calculated separately under the business travel category.
This approach to emissions accounting demonstrates how electric car salary sacrifice schemes can be effectively integrated into a company's broader carbon reduction strategy. By working with sustainability experts like Furthr, companies can ensure these reductions are properly measured, verified, and incorporated into their environmental reporting and net zero roadmaps.
How The Electric Car Scheme Works
Our electric car salary sacrifice scheme is designed to be straightforward and beneficial for both employers and employees, while minimising administrative burden and financial risk.
From the employer perspective, implementing our scheme requires no capital outlay or ongoing costs. The process begins when an employee selects their preferred electric vehicle through our platform, which offers access to every electric car on the market. The employer then orders the vehicle, establishing a lease agreement with our partner leasing companies. This lease agreement is underwritten by the salary sacrifice arrangement, wherein the employee agrees to receive the electric car as a benefit in exchange for sacrificing a portion of their gross salary.
The salary sacrifice element is the key mechanism that delivers significant savings. Since the sacrificed portion of salary is taken before tax and National Insurance calculations, employees benefit from tax relief on the amount sacrificed. The Electric Car Scheme manages all aspects of the payroll adjustments, ensuring the employer recoups the full cost of the vehicle lease while the employee benefits from the tax advantages. This pre-tax approach typically enables employees to save between 20-50% compared to leasing the same vehicle privately.
For employees, the experience is remarkably simple. They choose their preferred electric vehicle from our extensive range, which includes everything from affordable city cars to premium electric SUVs, with both new and used options available. The all-inclusive package typically covers insurance, maintenance, road tax, and breakdown cover, meaning employees benefit from both financial savings and convenience. With the Benefit-in-Kind tax rate for electric cars set at just 3% for 2025/26, the tax implications are minimal compared to traditional company car agreements for petrol or diesel vehicles, which can attract BiK rates up to 37%.
Our Complete Employer Protection policy, included as standard from day one, provides peace of mind by safeguarding employers against unexpected costs if an employee leaves the company or takes extended leave during the lease period. This comprehensive protection removes the financial risk often associated with salary sacrifice schemes, allowing employers to offer this valuable benefit without concerns about potential liabilities.
The Multifaceted Benefits of Electric Car Salary Sacrifice
The benefits of implementing an electric car salary sacrifice scheme extend well beyond simple emissions reduction, creating value for companies, employees, and the broader environment.
For organisations, our electric car salary sacrifice scheme represents a powerful addition to sustainability strategies without imposing financial burdens. The scheme is designed to be cost-neutral for employers, with the employee's salary sacrifice covering the lease costs. This allows companies to make meaningful progress on scope 3 emissions reduction without capital expenditure or ongoing costs. From an ESG perspective, facilitating employee transition to electric vehicles demonstrates tangible commitment to sustainability objectives, which is increasingly important for stakeholders, investors, and customers. The scheme also substantially enhances employee benefits packages, aiding in both recruitment and retention in competitive talent markets. Many of our clients report that electric car salary sacrifice has become one of their most appreciated employee benefits, particularly as awareness of both climate issues and the financial advantages of electric vehicles continues to grow.
For employees, the financial benefits are compelling. The combination of income tax and National Insurance savings typically reduces the cost of driving an electric car by 20-50% compared to private leasing or PCP arrangements. For a higher-rate taxpayer, this can translate to savings of thousands of pounds annually. The all-inclusive nature of our packages also removes the uncertainty associated with vehicle ownership or traditional leasing, as maintenance, insurance, breakdown cover, and even tyre replacements are typically included. The peace of mind this provides is invaluable, especially for those new to electric vehicle ownership. Beyond the financial aspects, employees also benefit from driving newer, safer, and more technologically advanced vehicles than they might otherwise afford, while simultaneously reducing their personal carbon footprint. The substantially lower running costs of electric vehicles—typically 3-5 times cheaper per mile than petrol alternatives—further enhance the financial proposition, especially as fuel prices remain volatile.
Environmental benefits extend far beyond simple CO2 reduction. Transportation represents one of the largest sources of emissions in the UK, and accelerating the transition to electric vehicles is critical for meeting national climate targets. By removing the price barrier to electric vehicle adoption, salary sacrifice schemes enable a broader demographic to participate in this transition. The increased adoption of electric vehicles also drives demand for charging infrastructure and renewable energy, creating positive feedback loops that further decarbonise the transportation system. Perhaps most immediately tangible is the improvement in local air quality, as electric vehicles produce zero tailpipe emissions, reducing harmful pollutants in urban areas and around workplaces. This air quality benefit is particularly significant for companies with premises in Clean Air Zones or Ultra Low Emission Zones.
The Environmental Significance of Used Electric Cars
Our used electric car salary sacrifice offering provides a particularly compelling environmental proposition that deserves special attention in any sustainability discussion. While the climate benefits of new electric vehicles are well-established, used electric cars offer an even more favourable environmental profile that aligns perfectly with circular economy principles.
The environmental impact of any vehicle is front-loaded, with a significant portion of lifetime emissions occurring during the manufacturing process. When an employee chooses a used electric car through our salary sacrifice scheme, they are essentially sharing the environmental cost of manufacturing across multiple users, improving the overall efficiency of resource utilisation. This approach extends the productive life of vehicles that have already been manufactured, maximising the return on the environmental investment already made.
From a carbon perspective, used electric cars typically have an extremely short carbon payback period when replacing petrol or diesel vehicles. Since the manufacturing emissions are effectively amortised across multiple owners, the emissions advantage begins almost immediately. This makes used electric vehicles one of the most rapidly impactful carbon reduction measures available to individuals and organisations.
Beyond carbon considerations, extending the useful life of electric vehicles also reduces demand for new raw materials, including those with complex supply chains and extraction impacts, such as lithium, cobalt, and rare earth elements. While the electric vehicle industry is making significant strides in improving supply chain sustainability and increasing recycled content, maximising the service life of existing vehicles remains an environmentally optimal approach.
Our used car offering also makes electric vehicles accessible to a broader range of employees by significantly reducing monthly costs. This democratisation of access to electric vehicles is crucial for ensuring the benefits of the transition to electric mobility are widely shared across society rather than concentrated among those who can afford new vehicles. Used electric cars available through our scheme start from significantly lower monthly payments than new vehicles, while still delivering the substantial running cost advantages and environmental benefits intrinsic to electric mobility.
Ready to Accelerate Your Sustainability Journey?
Our partnership with Furthr creates a powerful combination for organisations serious about reducing their carbon footprint while enhancing employee benefits. Together, we offer a comprehensive approach to addressing the challenging area of commuting emissions, which often represents a substantial portion of corporate carbon footprints yet has traditionally been difficult to influence.
The electric car salary sacrifice scheme represents a rare opportunity to simultaneously advance multiple corporate objectives—from sustainability and ESG commitments to employee satisfaction and retention—without imposing additional costs on the organisation. In the current economic climate, where both environmental consciousness and financial prudence are paramount, solutions that deliver multiple benefits without financial burden are increasingly valuable.
Through our partnership, companies can benefit from Furthr's expertise in carbon accounting and emissions reduction strategies alongside The Electric Car Scheme's proven approach to making electric vehicles affordable and accessible for employees. This combined offering helps organisations not only measure and understand their emissions profile but also implement concrete, impactful reduction measures.
The transition to electric mobility is accelerating across the UK, driven by environmental awareness, evolving regulations, and increasingly compelling economics. By implementing an electric car salary sacrifice scheme, your organisation can position itself at the forefront of this transition, demonstrating leadership and creating tangible benefits for both your employees and the planet.
To learn more about implementing an electric car salary sacrifice scheme at your company and how it can contribute to your net zero goals, contact us today for a no-obligation consultation. Our team of specialists can provide a detailed assessment of the potential benefits for your specific organisation, addressing any questions or concerns you might have about implementation.
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How to Get Started with a Salary Sacrifice Car Scheme in 6 Steps
Starting a salary sacrifice car scheme takes six simple steps, from checking eligibility to receiving your vehicle and enjoying automatic payments.
1. Check employer scheme availability
Speak with your HR department or benefits team to confirm if this option is available at your company.
2. Browse available vehicles
Access your employer's scheme portal to explore available vehicles. Electric vehicles offer the best value with only 2% BiK tax until 2025.
3. Select vehicle and terms
Choose your vehicle and set your lease length (24-48 months) and annual mileage. The portal will show your monthly payment amount before tax savings.
4. Complete paperwork
Submit your application and sign the salary sacrifice agreement that outlines your gross salary reduction.
5. Receive your vehicle
After approval, your new vehicle will be delivered, typically within 2-12 weeks.
6. Benefit from automatic payments
The agreed amount is deducted from your gross salary each month, reducing your income tax and National Insurance contributions.
Whether you’re an employee or employer exploring a salary sacrifice scheme, The Electric Car Scheme offers an excellent way to make electric vehicles more affordable and accessible to a wider audience. Learn more by visiting our website.
Frequently Asked Questions
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Implementing our electric car salary sacrifice scheme involves no net cost to your organisation. The scheme is meticulously designed to be cost-neutral, with the employee's salary sacrifice covering the full lease costs. There are no set-up fees, ongoing management charges, or hidden expenses. We handle all the administrative aspects, providing the necessary payroll adjustment calculations to ensure the scheme remains financially balanced for employers.
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This common concern is comprehensively addressed through our Complete Employer Protection policy, which is included as standard from day one of implementation. This protection ensures that if an employee leaves the company for any reason during their lease period, the employer won't face unexpected costs or ongoing lease obligations. The protection extends to various scenarios including resignation, redundancy, maternity leave, and long-term sickness, providing comprehensive peace of mind for employers.
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Yes, one of the distinctive features of The Electric Car Scheme is that employees can select any electric car available on the market. Unlike some salary sacrifice providers that limit choice to certain manufacturers or models, we offer complete freedom of choice. This includes everything from affordable city cars to premium electric SUVs, with both new and used options available. This flexibility ensures employees can select a vehicle that perfectly matches their lifestyle, budget, and environmental priorities.
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The savings are substantial and vary based on the employee's tax bracket and the vehicle chosen. Typically, employees save between 20-50% compared to leasing privately, with higher-rate taxpayers benefiting from the largest savings. These savings derive from reductions in income tax and National Insurance contributions on the sacrificed portion of salary, combined with the favourable 3% Benefit-in-Kind rate for electric vehicles in 2025/26. For many employees, these savings make premium electric vehicles that would otherwise be unaffordable suddenly within reach.
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Our electric car salary sacrifice scheme directly addresses Scope 3 emissions from employee commuting, which for many organisations represents a significant proportion of their carbon footprint. By facilitating the transition from petrol and diesel vehicles to electric alternatives, companies can achieve measurable reductions in their carbon emissions. Our partner Furthr can help quantify these emission reductions and integrate them into your broader sustainability reporting and net zero strategy. Beyond the direct emissions impact, implementing the scheme also demonstrates tangible commitment to sustainability, which is increasingly important for stakeholder engagement and ESG reporting.
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Last updated: 20.05.25
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.
