Salary sacrifice cars are a win, win, win - for employee, employer and the environment.

Employees have told us that: “Having the security of a fixed monthly amount for my car - with all expenses covered, which includes costs like maintenance and breakdowns, brings me great considerable peace of mind.” They know, every month, exactly what their electric car will cost. They also don’t have the high front-end costs of getting an EV which they would if they purchased one in other ways.

We’re hearing that salary sacrifice Electric Vehicles (EVs) are now an essential part of their financial planning. Not only are they significantly reducing individuals’ commuting costs, they are also contributing to a more sustainable environment. Employers win too - this is a benefit that costs nothing to implement, yet supports employee recruitment, engagement and retention - and reduces National Insurance contributions, which are set to rise this April. It’s a win, win, win - for employee, employer and the environment.

Employers have long discussed inclusive financial wellbeing in employee benefits, but not everyone recognises that EVs, far from being an elite benefit, salary sacrifice EV schemes are available to most employees, provided they earn over the National Living Wage after reductions. As the cars are accessed through an employer benefits scheme, employees don’t need to find a deposit or worry about credit checks.

Tusker’s EV Driver Survey 2024 showed that 62% of employees plan to get an EV as their next car. They said one of the main incentives is the potential to make savings through a salary sacrifice scheme, with 60% highlighting that cheaper running costs are a key consideration when choosing an EV.

Post-Budget, the Government is continuing to support the adoption of EVs through salary sacrifice and data released earlier this year by the British Vehicle Rental and Leasing Association showed take up of salary sacrifice car schemes rose by 51% in 2024, with 87% of employees opting for an EV. However, when motorists don’t have access to the tax advantages of a salary sacrifice car scheme, the picture is different.

The BVRLA also found that HR challenges are changing in 2025. Instead of recruitment and retention being major concerns, now, it’s more about staff motivation and engagement.

Making EVs accessible through salary sacrifice

When it comes to employees wanting an electric vehicle, it’s well documented that the upfront amount required can be one of the main barriers to getting a car.

A YouGov survey found that 54% of potential car buyers who are not yet driving electric stated they were put off by a high initial purchase amount. However, salary sacrifice car schemes offered by employers have really turned the tide. Under these schemes, employees drive an electric vehicle without the upfront payment and instead have a fixed monthly amount that includes not just the car itself but also insurance, servicing, and maintenance. It’s an ideal way of managing motoring costs and knowing that there will be no surprises with breakdowns, flat tyres or any of the other issues likely to impact cars.

The benefits also go beyond just savings. For employees, especially those on lower pay bands, the opportunity to drive a new car without a hefty deposit or unpredictable running expenses is invaluable. However, employers do need to consider that HMRC rules state that individuals cannot sacrifice their salary below the National Minimum Wage.

The real-life impact

One of our drivers explained to us that a salary sacrifice EV scheme can help reduce financial stress. Previously struggling with the unpredictability of personal car ownership and unexpected costs, they switched to an electric car through salary sacrifice and it was a game-changer. No hidden costs, no surprises and even if their job changes or they experience a life changing event, they are protected with the lifestyle protections. They simply hand the car back.

These lifestyle protections mean that should an employee leave their role, get made redundant, go on maternity/paternity leave, or long-term sick leave, there are no financial penalties for either the employer or the employee.

There are several elements to unpack here. Flexibility is particularly valuable for lower-income employees, who may be more vulnerable to financial shocks. There is extra support - there are options like ‘pre-loved’ cars, Tusker’s used car proposition, and longer-term agreements of up to 5 years which make monthly amounts lower, so EV’s become even more affordable for a wider range of employees and aren’t just reserved for higher earners but are genuinely inclusive.

Then there are the savings on fuel. The savings extend even further when comparing fuel expenses. Based on our journey cost calculator, the difference between driving a DS3 Crossback E-TENSE (electric) versus a DS3 Crossback (petrol) over 12,000 miles annually can result in savings of around £1,727, based on current electricity and petrol prices. These savings can make a significant impact on household budgets.

*correct as of 10.2.25 (based on 1000 miles per month)

Marrying financial wellbeing and ESG goals supported

Beyond the immediate financial benefits for employees, EV adoption also aligns with broader corporate sustainability goals. By encouraging employees to drive ultra low-emission vehicles, companies can support their Environmental, Social, and Governance (ESG) objectives. while simultaneously enhancing their employee value proposition.

Tax efficiencies for employers too

Additional incentives exist for organisations, too. Salary sacrifice schemes are tax efficient, so both employers and employees can benefit from reduced National Insurance contributions. Companies can choose to reinvest these savings in further enhancing their benefits packages or supporting other ESG initiatives, creating more wins for employer and employee.

Although incorporating electric vehicles into financial wellbeing strategies may have seemed unconventional a few years ago, the evidence now points to it being a highly effective and useful benefit for employer and employees. By offering EV salary sacrifice schemes, employers are providing their workforce with more than just cars; they are offering stability, predictability, and significant savings. These schemes can be life-changing for employees, particularly those who are cost-conscious or on lower pay scales.

Providing inclusive and meaningful benefits like EV schemes can be crucial in attracting and retaining talent. For the companies that have already embraced this approach, the results speak for themselves. The ability to support employees’ financial wellbeing while advancing sustainability objectives is proving to be a winning formula.

 By Tusker

Related Companies