Electric Vehicle Salary Sacrifice

Salary Sacrifice Scheme


  • Typical corporate fleet size 50 – 1000
  • Only available for battery electric vehicles
  • Employee eligibility – minimum age 21 and in continuous employment for at least 12 months
  • Complete maintenance and breakdown, including breakdown, maintenance, servicing, and tyres
  • Insurance cover arranged through an insurance company or provided by the employer

Broker responsibilities:

  • Scope and design of the salary sacrifice scheme
  • Interactive digital quote tool
  • In-life management

Salary Sacrifice Scheme Details

  • Salary sacrifice is a way for an employee to legally give up (sacrifice) a portion of their salary in return for something else, in this case, a car.
  • The employer and employee agree to amend the employment contract terms reducing the employee’s entitlement to cash remuneration.
  • The cash entitlement sacrifice is made in return for a form of the BEV 
     (battery electric vehicle).
  • Both employer and employee can benefit from salary sacrifice. For example, when a portion of the employee’s salary that is subject to NIC (National   Insurance Contributions) and income tax is swapped for a benefit that is NIC and income tax-free or partially exempt non-cash benefit.
  • The employee’s net salary must not be reduced below the National Minimum Living Wage rate by the salary sacrifice agreement.
  • Salary sacrifice schemes allow businesses to offer the additional benefit of a BEV to all permanent employees who meet the eligibility criteria.
  • Employees receive a fully electric vehicle in return for a fixed monthly deduction from their gross salary, giving them NIC and income tax savings.
  • Limiting the scheme to fully electric vehicles maximises savings by reducing   Benefit in Kind tax costs and simplifies scheme administration.
  • The scheme supports sustainability and helps employees do their part to   achieve net-zero emissions

Salary Sacrifice works Costs

  • Car’s gross cost. Monthly gross lease from the quotation portal, including maintenance, servicing, and tyres


  • NIC and income tax savings. Reduction in NIC and tax payments. Monthly gross lease x NIC and marginal income tax rate


  • Benefit in Kind tax. Collected in tax code. BIK rates for EVs are 1% 2021/2022, 2% 2022/2023 and through 2024-2025


  • The net cost of your car

Salary Sacrifice Benefits

Benefits for employees:

  • A cost-effective way to drive a brand new fully electric car. There are many vehicles to choose from, all with the latest technology and equipment.
  • Hassle-free – package includes breakdown cover, insurance, maintenance, road tax, servicing, and tyres.
  • Significant savings – benefit from NIC and income tax savings
  • Simple process – create as many quotes as needed to choose the right car. No online credit checks and low upfront costs.
  • Low-cost driving – fully charging an electric vehicle is significantly cheaper than purchasing a full tank of diesel or petrol. EVs are permitted in Ultra Low Emissions Zones and are exempt from congestion charging. 

Benefits for employers:

  • Enhanced reward packages and improved employee engagement. Attract, retain, and reward valued employees.
  • The BEV only approach simplifies the operation and administration of the scheme making it easier to communicate compelling offers.
  • Supports sustainability – fully electric vehicles are much better for the environment, reducing business travel emissions.
  • Easy implementation and minimal costs
  • Tax-efficient – employers receive NIC savings from the sacrificed salary

Salary Sacrifice Sustainability

The salary sacrifice scheme only relates to fully electric vehicles. Therefore, it is vital that employees/customers carefully consider their options and ensure the vehicle type is suitable for their business and individual needs.

Manufacturers’ figures may differ from real-world driving. Your actual range will depend on several factors, including the number of passengers, load weight, outside temperature, equipment usage, and driving style. The graphic above is just a guide, and you should make an informed decision based on your research and personal circumstances. 

Issue Solution
What is the aim of the scheme? • To drive sustainability
• Offer enhanced employee benefits
• Both
Scheme interest • Conduct a survey to establish employer/employee interest
• Consider how many EVs are needed per annum
Employee eligibility • Aged 25 and over
• Minimum service length
• Not currently in receipt of cash allowance or company car
• Those who are currently in receipt of cash allowance or company car
Scheme design • Fleet policy – determine the number of essential drivers, opt-out drivers, company car drivers, and non-eligible drivers who may use the vehicle for occasional company use
Car options • Available battery electric vehicles only
No of vehicles • Estimate volume of vehicle uptake
Lease period • 24-36 months
Vehicle sustainability • Check if an EV is suitable for the employee
Salary deduction • Use current payroll facilities to deduct salary sacrifice payments
• Account for any other existing salary sacrifice schemes, such as cycle to work
Insurance • Outsourced or employer insurance
• How will the deductions work?
Documentation • Designed for employee and employer
Quotation • How are they completed?
• Employee facing quote website/tool?
• Requirement to check access/eligibility for the scheme
Charging • Home charging costs/requirements?
• How will this work?

Stakeholder Responsibilities

The broker is responsible for:

  • Facilitating the insurer and quote provider
  • Providing policy documentation and scheme design after consultancy
  • Providing employee support and guidance on salary sacrifice
  • Undertaking driver’s license checks
  • Co-ordinating charging points
  • Supporting customers through the quotation and order process
  • Managing contractual amendments and lifestyle events
  • Checking minimum salary thresholds

The insurer is responsible for:

  • Providing insurance quotations for a fixed contract period
  • Collecting insurance premiums
  • Reviewing policy in the event of a claim

The quote provider is responsible for:

  • Calculating driver rentals and appropriate salary deductions
  • Providing a breakdown of the quote, including NI, tax, and BIK
  • Amending the employee contract
  • Overseeing the App/website

Express Vehicle Contracts is responsible for:

  • Providing non-regulated CH product and permission to use it for salary sacrifice
  • Supporting the customer with any contractual amendments
  • Concessions around settlement figure/provision pot
  • Training support and product material for brokers
  • EV rate books price guide

The employer is responsible for:

  • Agreeing the eligibility criteria and scheme design
  • Facilitating deductions through payroll
  • Arranging insurance
  • Agreeing provisions for lifestyle events
  • Distributing product material to eligible employees
  • Checking minimum salary thresholds

The employee is responsible for:

  • Requesting quotations through quote provider/broker
  • Signing the addendum confirming the order
  • Advising employer of any changes in lifestyle events/mileage
  • Any insurance claims