Salary sacrifice for electric vehicles represents one of the most attractive employee benefits available in the UK today. This arrangement allows employees to 'sacrifice' part of their gross salary in exchange for a fully maintained electric vehicle, resulting in significant tax and National Insurance savings for both parties.
Key Benefit: Employees can save between 20-60% on the total cost of an electric vehicle compared to personal purchase or lease, while employers reduce their National Insurance contributions and support environmental sustainability goals.
How Salary Sacrifice Works
The mechanism is elegantly simple yet highly effective. Instead of receiving their full gross salary, employees agree to a reduction that covers the monthly cost of their electric vehicle lease. Since this reduction happens before tax and National Insurance calculations, the employee's taxable income decreases, resulting in substantial savings.
For employers, the arrangement is equally beneficial. The salary sacrifice reduces the employee's gross pay, which in turn reduces the employer's National Insurance liability. Most schemes are designed to be cost-neutral or even cost-positive for employers while providing significant value to employees.
Tax Benefits and Calculations
The tax advantages of salary sacrifice EV schemes are substantial, particularly for higher-rate taxpayers. Electric vehicles benefit from extremely low Benefit-in-Kind (BIK) tax rates, currently set at just 2% for pure electric vehicles registered after April 2020.
Calculate Your Potential Savings
Use these specialised tax calculators to understand your exact savings potential:
Example Savings Scenarios
Consider a basic rate taxpayer earning £35,000 annually. Through salary sacrifice, they might access an MG4 for approximately £266 per month net cost, compared to £400+ for a traditional personal lease. For higher rate taxpayers earning £70,000+, the savings become even more pronounced, with potential reductions of 40-50% compared to personal arrangements.
The 2% BIK rate for electric vehicles is scheduled to increase gradually: 2% in 2024-25, rising to 3% in 2025-26, 4% in 2026-27, and 5% in 2027-28. However, these rates remain significantly lower than conventional vehicles, which can attract BIK rates of 25-37% depending on CO2 emissions.
Leading Salary Sacrifice EV Providers
The UK market features several established providers, each offering unique advantages. Our comprehensive analysis covers the top-rated schemes based on customer satisfaction, employer protection, and overall value proposition.
A 5-star rated, B Corp certified provider offering salary sacrifice for new and used EVs, with savings of 20-50%. Known for its 'Complete Employer Protection' from day one, which covers early termination risks like employee resignation.
Savings Range: 20-50% monthly cost reduction
Employer Setup: Free implementation
MG4 Example
£266/month net
£70,000 salary, 3-year lease
Kia Niro EV Example
£461/month net
40% taxpayer, 3-year lease, 10k miles/year
Key Features
- Complete Employer Protection from day one
- Offers both new and used electric vehicles
- Used EVs available for delivery within 14 days
- The Charge Scheme offers 20-50% savings on EV charging
- B Corp Certified
- No upfront employee deposits required
- All-inclusive packages (maintenance, insurance, road tax)
Visit The Electric Car Scheme
A highly-rated provider with over 6,500 employers enrolled. The scheme is free for employers to set up and focuses on simplicity, offering all-inclusive packages and a digital HR dashboard for easy management.
Savings Range: Up to 40% monthly cost reduction
Employer Setup: Free implementation
Key Features
- Includes a free home charger or 4,000 miles of free charging
- All-inclusive packages cover insurance, servicing, and breakdown cover
- Digital HR dashboard for scheme management
- Employer protection against unexpected events like resignations (starts after 3 months)
- Part of the B Corp certified Octopus Group
Visit Octopus Electric Vehicles
An award-winning, B Corp certified scheme offering savings of up to 60% on new and used EVs through its 'reloved®' marketplace. Provides a 'Zero Risk Guarantee' for employer protection.
Savings Range: Up to 60% monthly cost reduction
Employer Setup: Free implementation
Key Features
- Offers new and used EVs via 'reloved®' marketplace
- Zero Risk Guarantee for employer protection
- Includes 5,000 free charging miles via OVO partnership
- All-inclusive package with maintenance, MOT, and breakdown cover
- B Corp Certified
- Optional home charger installation
Visit Loveelectric
The UK's first all-in-house EV salary sacrifice scheme, claiming to offer the widest range of new and used EVs in the UK with savings up to 60%. The scheme is cost-neutral for employers and includes comprehensive packages.
Savings Range: Up to 60% monthly cost reduction
Employer Setup: Free implementation
Porsche Macan Electric
£599/month net
£125,000 salary, 48-month, 5k miles/year
Audi Q4 e-tron
£217/month net
£100,000 salary, 48-month, 5k miles/year
Key Features
- Wide range of new and used EVs
- All-inclusive packages (insurance, maintenance, road tax, breakdown cover)
- 10% discount on public charging via OVO
- Cost-neutral for businesses with minimal admin
- Employer protection included
Visit EZOO
Offers the 'EcoMute' salary sacrifice programme focused on reducing emissions and motoring costs. The all-inclusive package covers insurance for up to 3 drivers, servicing, and smart charging.
Employer Setup: Free implementation
Dacia Spring Expression
£197/month net
36-month lease, 8k miles/year
Polestar 4 Long Range
£589/month net
Contact for term details
BYD Dolphin Design
£378/month net
Contact for term details
Key Features
- All-inclusive package with insurance for up to 3 drivers
- Includes servicing, maintenance, and premium tyre replacement
- Smart charging solutions
- Early Termination Protection
- Offers both new and used cars
Visit WeVee
A large vehicle leasing broker that provides a comprehensive salary sacrifice scheme for electric and plug-in hybrid vehicles, emphasising significant employee savings and environmental benefits.
Employer Setup: Free implementation
Tesla Model 3 RWD
£400.44/month net
40% taxpayer, 1+47 months, 5k miles/year
BMW i4 Gran Coupe
£385.39/month net
40% taxpayer, 1+47 months, 5k miles/year
Key Features
- No personal credit check required for employees
- Optional early termination protection and comprehensive insurance
- Includes roadside assistance, servicing, and maintenance
- Supports grey fleet risk management
- Employer saves on National Insurance Contributions
Visit Select Car Leasing
An EV specialist offering a flexible and modular salary sacrifice scheme. Provides a 'Car Reward Portal' for employees to manage their orders and includes options for home charger installation.
Savings Range: 20-60% monthly cost reduction
Employer Setup: Free implementation
Key Features
- Modular scheme tailored to business needs
- Option to include home EV charger installation in the package
- Offers both new and high-quality second-hand EVs
- Online portal for employees to browse and order vehicles
- Helps with HR, policy, and tax guidance
Visit DriveElectric
An award-winning, Glasgow-based provider offering a consultative approach to EV-only salary sacrifice. The scheme is free to implement and includes detailed calculators and support for employers.
Savings Range: 30-60% monthly cost reduction
Employer Setup: Free implementation
Key Features
- EV-only salary sacrifice scheme
- Provides detailed FAQs, videos, and savings calculators
- Handles setup and integration with HR/payroll
- Personalised account management
- All-inclusive benefits like maintenance and insurance
Visit Fleet Alliance
Formerly LeasePlan, Ayvens offers an EV salary sacrifice scheme tailored for large businesses with over 1,000 employees. It focuses on reducing BIK tax and supporting corporate environmental goals.
Target Market: Large enterprises (1,000+ employees)
Key Features
- Specialises in schemes for companies with over 1,000 employees
- Includes early termination cover for risks like redundancy or sick leave
- Reduces employer's National Insurance contributions
- Aids in reducing reliance on 'grey fleet' vehicles
- Provides a consultative approach to manage scheme risks
Visit Ayvens
Carwow's salary sacrifice scheme, designed to be a simple, all-in-one solution for businesses of all sizes. It offers a single monthly payment covering the vehicle, insurance, and maintenance with no upfront deposit.
Savings Range: Up to 40% monthly cost reduction
Key Features
- No upfront deposit required
- Single monthly payment includes car, insurance, maintenance, and breakdown cover
- Suitable for businesses of all sizes
- Some schemes may include used cars
Visit Carwow Leasey
A leading provider with over 25 years of experience, offering full implementation and integration of salary sacrifice schemes with HR systems. The scheme is free to set up and focuses on affordability and sustainability.
Employer Setup: Free implementation
Key Features
- Full scheme implementation and HR system integration
- Risk mitigation for employee absences
- Includes comprehensive insurance and road tax
- Dedicated online zones for employers and employees
Visit Zenith
Choosing the Right Provider
When selecting a salary sacrifice EV provider, several factors should guide your decision-making process. The most critical considerations include employer protection policies, the range of vehicles available, customer service quality, and the comprehensiveness of included services.
For Small to Medium Businesses
The Electric Car Scheme stands out with its immediate employer protection and B Corp certification, making it ideal for businesses prioritising ethical practices and comprehensive risk coverage. Octopus Electric Vehicles offers exceptional value with over 6,500 enrolled employers and the highest review count, providing confidence through proven track record.
For Large Enterprises
Ayvens specialises in serving companies with over 1,000 employees, offering sophisticated risk management and consultative support. Zenith brings 25 years of experience with robust HR system integration capabilities.
For Maximum Savings
Loveelectric and EZOO both offer savings up to 60%, with Loveelectric's 'reloved®' marketplace providing access to quality used EVs and EZOO claiming the widest vehicle range in the UK.
Calculate Your Personal Benefits
Before making a decision, use these calculators to understand your specific tax position:
Implementation Considerations
Successfully implementing a salary sacrifice EV scheme requires careful planning and clear communication. All the providers listed offer free setup and comprehensive support, but the process typically involves several key stages.
For Employers
The implementation process generally includes scheme design consultation, integration with existing HR and payroll systems, employee communication campaigns, and ongoing scheme management. Most providers offer turnkey solutions that minimise administrative burden while maximising employee uptake.
For Employees
Employees should consider their current tax position, expected tenure with the employer, annual mileage requirements, and preference for new versus used vehicles. The schemes typically require a minimum commitment period, usually aligned with the lease term of 2-4 years.
Important Note: Salary sacrifice arrangements can affect other benefits calculated on gross salary, such as pension contributions, life insurance, and mortgage applications. Employees should consider these factors when evaluating their options.
Future Outlook and Recommendations
The salary sacrifice EV market continues to evolve rapidly, with increasing competition driving better value and service levels. Government support through low BIK rates is scheduled to continue, though rates will gradually increase from 2025 onwards.
Our analysis suggests that The Electric Car Scheme and Octopus Electric Vehicles currently offer the best combination of customer satisfaction, employer protection, and comprehensive service. For organisations seeking maximum savings, Loveelectric and EZOO provide compelling options with their 60% savings potential.
Regardless of provider choice, the fundamental value proposition of salary sacrifice EV schemes remains compelling. With savings of 20-60% compared to personal arrangements, comprehensive packages that eliminate most ownership risks, and significant environmental benefits, these schemes represent one of the most effective ways to accelerate electric vehicle adoption in the UK.