Electric vehicle (EV) schemes are becoming a more popular benefits offering as businesses aim to reduce their carbon footprint. But what is an EV scheme exactly? And how do they work?
In this guide, we’ll walk through what EV salary sacrifice schemes involve and if they’re worth it, so you can decide if you should offer this benefit to your team (spoiler alert: yes!).
Let’s dive right in!
What is an EV salary sacrifice scheme?
An EV scheme is a type of salary sacrifice benefit you can offer to your employees, allowing them to lease or finance an electric vehicle in a cost-effective way. This is a great way for employees to save money on what is usually considered a large and expensive purchase, or to give an environmentally-friendly vehicle a test spin before committing to it.
It’s also a great opportunity for employers to meet their environmental, social, and corporate governance (ESG) goals, as EVs help reduce emissions and support clean energy initiatives.
How do EV salary sacrifice schemes work?
EV schemes use the salary sacrifice model, meaning that employees give up part of their pre-tax salary to put toward their electric vehicle, similar to how cycle-to-work and nursery schemes work.
In the case of EV schemes, the employer leases the car from an EV provider. The employer then offers the scheme to their team, where the employee pays for the car with a portion of their gross salary. That way, they save money on National Insurance and Income Tax.
Employees can save anywhere between 30% to 60% on a brand-new car through EV salary sacrifice schemes. And with some providers, they can also take advantage of free servicing and maintenance, full insurance and breakdown cover. Sounds like a good deal, right?
Is an EV salary sacrifice scheme worth it?
The short answer is yes! EV salary schemes are highly regarded by workers – and don’t require much work from your side – so they're worth considering.
For employees, they get to save a fair amount of money on a new car. Given the average cost of an EV is £50,000, this could be a significant saving. Not to mention, they get to feel good about doing their bit for the environment.
Plus, if someone’s new to the world of EVs, leasing one via a salary sacrifice scheme can be a great entry point instead of jumping straight to ownership.
Why should you offer an EV scheme to your team?
For employers, offering EV and other salary sacrifice schemes is an easy way to make yourself more attractive to potential candidates. After all, workers these days want more than just a decent salary, with 75% admitting they’d stay with an employer if they had a good benefit scheme.
Employers can also save on employee National Insurance Contributions through EV schemes, which is money you can then reinvest into the business. And on top of all that, providing an EV salary sacrifice scheme can lower your company’s carbon footprint, so if you’ve got lofty ESG goals to meet, this is a great place to start. It’s a win-win!
FAQ: EV salary sacrifice schemes
Do employees purchase the car outright with an EV scheme?
This depends on the scheme and the provider. Buying the car outright may be an option, but typically it’s a standard lease. By default you have to give the car back at the end of the lease period, but you might be able to purchase it for an agreed price based on its used market value.
Does the employee have to pay anything upfront?
No, all the employee will have to fork out for is the cost of electricity. So before you get an electric vehicle, you might want to consider the impact it will have on the cost of your home electricity bill.
How much does an electric vehicle (EV) cost through salary sacrifice?
Employees can save anywhere between 30-60% on the cost of an electric vehicle depending on the scheme, as the cost is pre-tax. That makes getting an EV through salary sacrifice one of the most affordable ways!
Can anyone get an electric car on the salary sacrifice scheme?
Employees who apply for the EV salary sacrifice scheme need to be over 18 years old, and have a fairly clean driving licence as insurance. It may be difficult for an employee with points on their record to be accepted for an EV scheme.
And that’s everything you need to know about EV salary sacrifice schemes. Take a look at our top EV scheme providers to get an idea of what you could offer to your team. Book a demo with one of our expert consultants who will help find the right EV provider for your team.