Why Your Employer Should Offer Electric Car Salary Sacrifice in 2026: Complete Business Guide
Image source: Shutterstock
Electric car salary sacrifice has moved from a "nice-to-have" to a strategic employee benefit for UK employers. With employee expectations changing, sustainability targets tightening, and electric vehicles becoming the new normal, more businesses are exploring whether this benefit suits their workplace.
This guide explains how electric car salary sacrifice works for employers in 2026, why it's growing so quickly, and why thousands of UK businesses are choosing The Electric Car Scheme to deliver it safely, simply, and cost-neutrally.
What Is An Electric Car Salary Sacrifice Scheme?
Electric car salary sacrifice is a tax-efficient employee benefit that allows your company to lease electric vehicles for employees. In return, employees agree to give up (or "sacrifice") a portion of their gross salary to cover the cost of the lease.
Because payments are taken before tax, employees save on income tax, National Insurance, and Benefit-in-Kind tax (which remains low for EVs). Unlike a personal lease paid from after-tax income, salary sacrifice dramatically reduces the real cost of driving an electric car - often by 20–50%.
For employers, the scheme can be set up with no upfront cost, no ongoing fees, and no financial risk when delivered through the right provider.
Image source: Polestar Media
For Employers: How Electric Car Salary Sacrifice Works
From your perspective as an employer, electric car salary sacrifice is designed to be low effort and low risk.
Here's how it works in practice.
Your company decides to choose The Electric Car Scheme as your salary sacrifice provider
We set up the salary sacrifice framework, HMRC documentation, and payroll integration
Employees choose an electric car through our platform, and the lease costs are deducted from their gross salary
Your business saves Employer National Insurance on the reduced salary, and our fees are covered by those NI savings and VAT refunds
You're left with a modern, highly valued employee benefit that supports sustainability goals without increasing your costs or admin workload.
Is Electric Car Salary Sacrifice Cost-Neutral For Businesses?
This is one of the most common employer concerns… and one of the biggest misconceptions.
With The Electric Car Scheme, electric car salary sacrifice is fully cost-neutral.
Employers save National Insurance on the reduced employee salary, and we use those NI savings plus 50% of the VAT refund to cover our fees. There are no setup fees, no subscription charges, and no hidden costs. If no employees take a car, your business pays nothing.
What Risks Do Employers Face With Salary Sacrifice Schemes?
Many employers worry about financial exposure if an employee leaves mid-contract. This concern is valid with some providers, which is exactly why we built Complete Employer Protection.
If an employee leaves, goes on long-term leave, or their circumstances change, the employer is protected from day one. You're not left paying early termination fees, and you won't be charged up to 50% of remaining lease payments, as is common elsewhere.
Our protection covers almost all scenarios, including maternity leave, making it one of the strongest risk solutions on the market!
Image source: Shutterstock
What Administrative Support Do Employers Receive?
We believe employers should do as little as possible. That's why we manage everything at The Electric Car Scheme.
We provide payroll-ready salary sacrifice inputs, accurate BiK, NI, and VAT calculations, draft HMRC documentation (P46(Car), P11D), a dedicated employer portal, employee education and launch communications, and ongoing scheme management and reporting.
You stay compliant, informed, and supported without extra admin.
Environmental, Social And Governance (ESG) Benefits
Electric vehicles play an important role in reducing emissions. On average, an EV has a 58% lower lifetime environmental impact than an internal combustion engine car.
With EVs now paying £10 first-year road tax and £195 standard rate from year two (introduced April 2025), salary sacrifice remains one of the most effective ways to increase EV adoption while supporting ESG goals.
For Employees: Why This Benefit Matters
Why Are Employees Asking For Electric Car Salary Sacrifice Schemes?
Employee expectations have shifted. Competitive salaries are no longer enough on their own. Today's workforce looks for benefits that genuinely improve day-to-day life, and electric car salary sacrifice does exactly that.
According to recent research from SIXT, published in the Workplace Journal, 67% of employees would like access to a flexible company vehicle.
Salary sacrifice schemes have already helped 680,000 drivers make the switch to EVs. Last year, 20% of new cars sold were electric, and 40% of them were acquired through these schemes.
Image source: Hyundai Newsroom
How Much Does Salary Sacrifice Save Employees?
Salary sacrifice allows employees to pay for an electric car before tax, which significantly reduces the real monthly cost. Most employees save between 20% and 50% compared to personal leasing.
What Is The BiK Rate For Electric Cars In 2026?
The 2025/26 BiK rate sits at 3%, rising to 4% from April 2026 and reaching 5% by 2027/28. This remains dramatically lower than petrol or diesel company cars, which can be taxed at up to 37%.
For example, a 40% taxpayer leasing a £45,000 EV could save £350–£500 per month through salary sacrifice.
Why Choose The Electric Car Scheme?
The UK electric vehicle market has, and is, improving and moving quickly.
As of the end of November 2025, there are over 1,750,000 fully electric cars in the UK, meaning 5.2% of the c.34 million cars on UK roads are fully electric.
Electric car salary sacrifice isn't a trend – it's becoming a standard workplace benefit.
Image source: Shutterstock
How Does The Electric Car Scheme Compare To Competitors?
Not all salary sacrifice schemes are created equal.
What sets The Electric Car Scheme apart is our true cost-neutrality with no employer fees, Complete Employer Protection from day one, no minimum company size requirement, full HMRC compliance handled for you, and ongoing employee engagement and education.
We don't just provide cars – we manage the entire scheme end-to-end.
Why Should Your Business Partner With The Electric Car Scheme?
By partnering with The Electric Car Scheme, your business improves recruitment and retention, supports ESG and Net Zero commitments, offers a highly valued benefit at no cost, and avoids financial and administrative risk.
Frequently Asked Questions
For Employers
Is there a cost to employers for running a salary sacrifice scheme?
No. The Electric Car Scheme is cost-neutral. Fees are covered by National Insurance savings and 50% of VAT refunds. There are no setup fees or subscriptions.
What happens if an employee leaves mid-contract?
Our Complete Employer Protection covers employers from day one, protecting you from early termination charges in almost all circumstances.
Does my company need a minimum number of employees?
No. We work with businesses of all sizes, from SMEs to large corporates.
How long does it take to set up?
Usually 2–4 weeks from initial call to launch.
What about maternity leave?
Maternity leave is covered under our Complete Employer Protection, with no underpayment risk to employers.
For Employees
How much can employees save through salary sacrifice?
Typically, 20–50% compared to personal leasing. A 40% taxpayer could save £350–£500 per month on a £45,000 EV.
What cars are available?
Over 200+ electric models from all major manufacturers, including new and used EVs.
Can employees include charging costs?
Yes. Through The Charge Scheme, employees can salary sacrifice EV charging and save 20–50% on home, workplace, and public charging.
Ready to offer an electric car salary sacrifice scheme?
Electric car salary sacrifice is one of the smartest benefits your business can offer in 2026 – valued by employees, aligned with sustainability goals, and cost-neutral for employers.
Book a call with our Business Development team and see how easy it is to get started.
Are you an employer?
BOOK A DEMOAre you an employee?
SEE AVAILABLE CARSEcs Business Toolkit
Electrify Your Fleet: Tools and Guides to Help Your Business Get Started
-
How the Scheme WorksFind out how salary sacrifice can work for you or your business.
-
Complete Employer ProtectionAll employers and drivers are protected from day 1.
-
Our ImpactWe are an award-winning B Corp - find out about how we do good.
-
Case StudiesJoin thousands of employers already offering The Electric Car Scheme.
Last updated: 17/12/25
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.
Copyright and Image Usage: All images used on this website are either licensed for commercial use or used with express permission from the copyright holders, in compliance with UK and EU copyright law. We are committed to respecting intellectual property rights and maintaining full compliance with applicable regulations. If you have any questions or concerns regarding image usage or copyright matters, please contact us at marketing@electriccarscheme.com and we will address them promptly.
