What is Salary Sacrifice?

Salary sacrifice schemes allow employers to offer an attractive and cost-effective benefit to their employees which is HMRC and VAT compliant.

The electric car salary sacrifice scheme allows employees the opportunity to drive a brand-new, fully insured and maintained electric car for significantly less than if they leased one privately.

The scheme works in the same way as other salary sacrifice incentives such as childcare or cycle-to-work and has been designed to help transition more company car drivers from conventional to electric cars.


How does Salary Sacrifice work?

An employer will engage with a vehicle leasing company (e.g. Peter Vardy Leasing) and arrange the lease of a pure-electric car at an agreed rate on behalf of their employee. The employer provides the car to the employee as a company car in return for a salary contribution each month, otherwise known as a salary sacrifice.

The cost of the car is deducted from the employee’s gross salary, meaning their income tax and National Insurance Contributions (NIC) are calculated based on the lower salary amount. Effectively, the employee will pay lower contributions towards income tax and National Insurance each month.

And it’s not only employees who benefit from cost savings. Employers will also pay reduced NIC each month as they will be paying their employees based on the lower salary amount, after the cost of the car is taken.


What are the benefits to an employer?

You can’t put a price on doing your bit to help the environment! A company car scheme that offers electric cars helps lower the carbon footprint of your business and actively supports climate change.

By offering an electric car salary sacrifice scheme, you will be providing a low-risk, cost-effective benefit to your employees that boosts workplace motivation, helps retain your existing staff and enhances your credentials as a prospective employer to new talent.

And because employees pay for their electric car from their gross salary, this saves you money as an employer on your National Insurance Contributions (NIC), providing a win-win solution to you and your employees.

The scheme also reduces the risks that come from employees using their own vehicles for business related journeys, known as grey fleets. With your employees driving brand-new electric vehicles through salary sacrifice, you have peace of mind that the cars being used for business purposes will be dependable. In turn, you will lower the reclaim expenses from business trips as more of your company cars will be using electricity instead of fuel.


  • Reduced business National Insurance Contributions (NIC)
  • An attractive employee benefit without increased costs to your business
  • Lower your fuel expenses as fewer conventional cars are used for business trips
  • Encourage cash allowance “drivers” back into company cars
  • Fully maintained and dependable cars reduce the risks associated to grey fleets
  • Helps support your Environmental, Social and Governance aspirations
  • A valuable tax-efficient benefit that is available to all employees
  • Increases employee engagement, motivation and supports retention
  • Enhances your credentials as a recruiter for new talent


What are the benefits to employees?

The short answer is, you can drive a brand-new fully electric car for a much lower cost than if you leased one privately. This is because the cost of the car is taken from your salary before income tax and other contributions have been deducted.

With no up-front costs, credit checks or end of term obligations, leasing an electric car through salary sacrifice is the most cost-effective and hassle-free solution to driving a company car.

Electric cars offered through salary sacrifice come inclusive of maintenance and insurance which provides peace of mind motoring for you and your employer.

And did you know charging an electric car costs a fraction of fuelling a conventional car. If you charge regularly at home, the typical cost for charging a mid-sized electric car (e.g. Kia e-Niro) would cost you around £9 and provide 250 miles of range. By comparison, the same amount of miles in a petrol or diesel car would cost approximately £30 in fuel.


  • Access to a brand-new electric car at a fraction of their normal cost
  • Significant income tax and National Insurance savings
  • No up-front costs, credit checks or end of term obligations
  • Transparent and fixed pricing for the duration of the term
  • Significantly lower your “fuelling” costs by switching to electric
  • Flexible mileage options and contract duration to suit your lifestyle
  • Maintenance, insurance and breakdown cover included
  • Reduce your carbon footprint

If you would like further information relating to the electric car salary sacrifice scheme, please fill out the Enquire Now form below and a member of the team will contact you shortly.

Enquire Now