Despite the turbulence that has surrounded electric vehicle manufacturing and sales in Europe, fleet managers and employees are beginning to realize how EVs can be a valuable asset for their financial well-being, reports Alison Argall, Tusker
Salary Sacrifice Electric Vehicles are an important part of financial planning for employees at a leading company in digital transformation. They not only reduce individuals’ commute costs but also contribute to a sustainable environment.
Employers have long talked about the importance of including financial well-being in employee benefits. However, not everyone knows that EVs are far from an elite benefit and can support employees on all pay scales. Salary sacrifice EV schemes can be accessed by most employees if they earn more than the National Living wage after reductions. Employees don’t have to worry about deposits or unexpected costs as the cars can be accessed by their employer.
It’s great that, even after the Budget, the government continues to encourage the adoption of EVs by salary sacrifice. The British Vehicle Rental and Leasing Association released data earlier this year that showed salary sacrifice schemes encouraged employee adoption of EVs. The British Vehicle Rental and Leasing Association released data earlier this year showing that salary sacrifice car schemes encourage employee adoption of EVs. When motorists do not have the tax benefits of a salary-sacrifice scheme, things are different.
Tusker’s EV Driver Survey 2024 also showed that 62% employees who intend to buy an EV for their next vehicle said that one of the biggest incentives is to save money through a salary-sacrifice scheme. 60% of respondents also cited that lower running costs were a major consideration when choosing an EV.
Salary sacrifice allows for the purchase of EVs
The upfront cost of EVs can be a major barrier to adoption. In fact, 54% potential car buyers that aren’t yet driving electric cars cite a high purchase price as a barrier. Salary sacrifice schemes for cars offered by employers are what has really changed the tide. These schemes allow employees to drive electric vehicles without having to pay upfront. Instead, they receive a fixed amount per month that covers the vehicle, insurance, maintenance, and servicing.
Benefits go beyond savings. Employees, particularly those in lower-paying bands, will find it invaluable to be able to drive a brand new car, without having to pay a large deposit or incur unpredictable costs.
HMRC regulations state that employees cannot reduce their salaries below the National Minimum wage.
Real-life impacts
The benefits are also reflected in the experiences of employees. Another employee explains how salary sacrifice EV programs can alleviate financial strain. They were previously struggling with the unpredictable nature of owning a personal vehicle, but switched to a salary sacrifice EV through their company and it changed everything. They chose this option because they knew there would be no hidden costs, even if their job changed or they experienced an unexpected life event.
Here are a few things to consider. Flexibility can be especially valuable to employees with lower incomes, as they may be more susceptible to financial shocks. Lower monthly payments are made possible by offering pre-owned cars and longer-term contracts. These initiatives ensure that benefits aren’t just for the highest earners, but are truly inclusive.
Predictability is one of the most attractive features of salary-sacrifice car schemes for many employees. These schemes are a great alternative to traditional car ownership where unexpected repair costs can ruin a budget. Instead, they bundle all the associated amounts into a fixed monthly amount. Employees can plan their finances more confidently, as they know that there will be no surprises, including depreciation charges, when the car is returned at the end.
The lifestyle protection means that if an employee leaves their job, is made redundant, goes on maternity/paternity or long-term sickness leave, neither the employer nor the employee will be penalized financially – they just return the car.
Fuel costs are also a factor in the savings. Zap-Map calculates that the difference in driving a Citroen e-C4 electric versus a Citroen c4 petrol over 10,000 miles per year can result around PS1,248 based on electricity and fuel prices. These savings have a major impact on household budgets.
Integrating financial well-being and ESG goals
EV salary sacrifice schemes have become increasingly popular as employers seek ways to support the financial health of their teams. They align with corporate sustainability goals, and offer employees immediate financial rewards. Companies can achieve their environmental, governance, and social (ESG), goals by encouraging employees to use low-emission cars.
Predictability is one of the most important benefits that salary sacrifice car schemes offer to employees.
Organisations can also benefit from additional incentives. Salary sacrifice plans are tax-efficient, which means that both employers and their employees will benefit from lower National Insurance contributions. These savings can be re-invested by companies in enhancing their benefit packages or supporting ESG initiatives.
Even though incorporating electric cars into financial well-being strategies might have seemed unorthodox a few short years ago, evidence shows that it is a very effective benefit. Employers who offer EV salary-sacrifice schemes provide their employees with more than cars. They also give them stability, predictability and substantial savings. These schemes are life-changing, especially for those employees who are on lower pay scales or cost-conscious.
As new changes to the workforce are implemented, offering inclusive and meaningful benefits such as EV schemes is crucial for retaining and attracting talent. The results of companies who have adopted this approach speak for themselves. Supporting employees’ financial well-being while advancing sustainability goals is proving a winning formula, and is setting new standards for employee benefits.
