What is an Electric Vehicle Salary Sacrifice Scheme?
Electric Vehicle (EV) Salary Sacrifice is a scheme that allows your employees to lease a brand-new electric car through a deduction from their gross salary, before tax and National Insurance contributions are calculated. It's a fantastic employee benefit that makes driving an EV more affordable and accessible. Essentially, it's like the Cycle to Work scheme, but for electric cars!
How does Electric Car Salary Sacrifice Work?
Our electric car scheme enables your people to select a new electric vehicle, on a lease agreement, from a range of popular options. Rather than make payments directly to the dealership, the monthly lease cost is deducted from the employee's pre-tax salary. This means significant savings for the employee and reduced NI contributions for your company.
The benefits of EV Salary Sacrifice for your team
Offering an EV Salary Sacrifice scheme provides a range of benefits:
Why use My Staff Shop for your EV salary sacrifice programme?
My Staff Shop’s EV Partners offer end-to-end support, from initial setup to ongoing management, ensuring a smooth and seamless experience for both you and your employees - with everything being hosted and easily accessible through your dedicated My Staff Shop platform. The contract also provides full Employer Protections so you don’t need to worry about being left holding the EV should employees leave the business. These protections kick in as soon as 3 months after taking delivery, and offer protections against most life events. In most cases you simply hand the car back to our EV Partner, allowing you to focus on the day to day running of the organisation ‘worry free’.
With a selection of electric vehicles, your scheme will cater to different needs, whether your employees are looking for sporty design or long range practicality, you’ll be able to offer a model that suits them. Our EV partners now also offer leases up to 5 years, and provide access to a range of 2nd hand EVs, both of which help bring the costs down even further, making this benefit even more affordable and inclusive for your employees, and improving eligibility for lower earners.
And of course, offering EV Salary Sacrifice as part of your My Staff Shop benefits package means that your employees maximise their savings, while remaining cost effective for your company.
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Frequently Asked Questions
Is an electric car tax deductible?
An electric car is not tax deductible in the traditional sense, but electric cars provided via salary sacrifice schemes offer significant tax advantages for both employees and employers. For Employees: Although tax isn’t “deducted” like with expenses, employees sacrifice a portion of their gross salary (before tax and National Insurance) in exchange for the use of an electric car. This means no Income Tax or National Insurance on the sacrificed amount, and only a small Benefit in Kind (BIK) tax to pay (3% in 2025/26 for fully electric vehicles). For Employers: While the car lease itself is not tax-deductible in the usual capital allowances sense, there are still financial benefits including: the employer saves on National Insurance contributions (since gross salary is reduced), lease payments may be treated as a business expense, depending on how the scheme is structured, and no upfront cost to you. |
Who owns the car in EV salary sacrifice?
| In an electric vehicle (EV) salary sacrifice scheme, the car is owned or leased by the third-party leasing provider — not the employee. Employees agree to “sacrifice” part of their gross salary in return for the use of the car, with access for personal and business use. At the end of the lease, the car is returned to the leasing company, taking the risk out of the hands of the employer. |
How much cheaper is a salary sacrifice electric car?
| You can save 20% to 50% compared to personal leasing, depending on your tax rate, the vehicle cost, and mileage. Salary Sacrifice is cheaper due to reduced taxable pay and low Benefit‑in‑Kind (BiK) rate for EVs – fully electric cars benefit from very low BiK rates in the UK (3% in tax year 2025/26) which keeps the tax on the “perk” of having the car low. Inclusion of maintenance and insurance are also built in, which might otherwise be extra. |
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