Leicester City Council’s salary sacrifice car scheme with Tusker has been running since 2013, originally introduced as a way to save money while offering employees access to better benefits. Over a decade later, the scheme is still delivering six-figure annual savings and has become a cornerstone of the council’s reward strategy.

In its early years, the initiative helped close its traditional leased company car fleet of around 50 cars and remove essential user allowances. But its purpose has steadily evolved. Today, it plays a key role in supporting recruitment and retention, delivering on sustainability goals and helping employees - particularly those on lower incomes - gain access to electric vehicles that might otherwise be out of reach.

As Cory Laywood, Head of Revenues, Benefits & Transactional Finance at Leicester City Council, explains: “An EV is typically 20% more expensive than a comparable petrol or diesel car. For many of our employees, a tax-efficient salary sacrifice scheme is the only way they can afford one. I don’t think they’d be able to do it otherwise.”

The scheme currently has a fleet of around 280 vehicles and is beginning to recover from a temporary dip during the pandemic. New car orders had reached an average of 10 per month in early 2017, and while COVID caused a sharp drop-off, numbers are rising again. The cars taken today tend to be of higher value than in earlier years, reflecting growing demand for electric and ultra-low-emission vehicles.

Strongest uptake among those earning less than £25k pa

Uptake remains strongest among lower- to middle-income employees. More than one-third (35%) of scheme participants earn less than £25,000 a year, and just 6% earn over £60,000. “This definitely has the most impact on our lower-paid workers,” says Laywood. “Of course, some senior staff love it too, but they make up a very small percentage of the workforce. It’s our everyday staff that benefit most.”

Employee loyalty is key. More than 50% of those who’ve taken a car through the scheme have gone on to lease a second or even a third vehicle. Increasingly, new employees are joining the scheme almost immediately upon starting their roles. The trend towards longer terms is also growing. Many employees now opt for four-year agreements instead of the traditional two or three, which aims to bring down monthly payments and spread costs more comfortably over time.

Sustainability drivers

Sustainability remains a major driver for the Council. Leicester has already reduced the CO₂ emissions cap on eligible cars from 120g/km to 110g/km, with 75% of the fleet already falling below this level. The longer-term aim is for at least half the fleet to have emissions under 50g/km - a significant increase from the current 3%. There is growing support for this transition, with Leicester’s own fleet also shifting to electric cars, and charging infrastructure being expanded across the city.

To make the transition smoother for employees, the Council has removed barriers such as mileage reimbursement discrepancies. Staff driving electric vehicles are reimbursed at the full 45p per mile AMAP rate (on par with petrol or diesel) rather than the lower advisory fuel rate that would otherwise apply. This initiative ensures there’s no disadvantage in using an electric vehicle for work, especially for those who might not have a home chargepoint and so are paying the higher network charges to recharge.

The scheme also supports Leicester’s commitment to localism. Vehicles are sourced and serviced locally wherever possible, keeping business within the region. While some exceptions exist - such as Tesla deliveries from hubs outside the city - servicing, maintenance and tyre replacement are handled via local providers.

Financial impact built into financial forecasts

This benefit is paired with positive internal financial impact. The savings from the scheme, originally used to subsidise travel options like bus passes, car parking and cycling, are now built into the Council’s financial forecasts.

Tusker, the Council’s long-term partner since the beginning, continues to play a central role in the scheme’s success. The company’s lifestyle protections, covering redundancy, resignation, and other major life events, help provide employees with peace of mind. Improvements in vehicle lead times and enhanced flexibility around agreement terms have also made the scheme easier to access than ever before.

Ultimately, the scheme has become one of the most powerful benefits the Council can offer, as it helps compete with the private sector, where company car schemes are more common.

“People are always surprised when we tell them we offer this,” says Laywood. “They often say, ‘Oh wow, you’ve got a car scheme?’ It’s a great tool for recruitment and for keeping people here.”

With a staff base of over 12,000 eligible employees, Leicester City Council plans to rapidly grow the scheme, with an aim to reach at least 10% participation in the coming years. Given the evidence so far, that target looks well within reach.

“We’ve levelled the playing field. We’re not trying to resist change—we’re embracing it. This lets us offer something genuinely valuable, particularly to people who might not otherwise get the chance. With the tax changes announced by the Government, it’s the beginning for us,” concludes Laywood.

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