Drivers in England who are signed up to 'salary sacrifice car scheme' warned

Drivers could gain access to an electric vehicle through a salary sacrifice scheme, it has been reported, as half of employees urge for changes. 48 per cent are backing the calls - and a third are citing it as the most attractive ‘eco-friendly workplace benefit’.

“A salary sacrifice car scheme – where an employee ‘sacrifices’ part of their gross (pre-tax) salary for a new vehicle – is a highly valued financial benefit for prospective and existing workers,” explained Dan Wright, product manager at VWFS Fleet.

“At minimal cost to the employer, salary sacrifice offers employees affordable access to a brand new vehicle, with no upfront payments, early termination fees or hidden costs. It also includes all extra vehicle costs, including insurance, servicing, maintenance and breakdown cover.”

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The cost-effective and tax-efficient solution offers drivers a cheaper way to access EVs. But a survey of 2,000 employed adults has revealed that just one-third (32%) of UK businesses currently offer a salary sacrifice car scheme.

Wright continued: “Salary sacrifice schemes have a crucial role in incentivising EV uptake through attractive tax incentives. The benefit-in-kind (BIK) associated with EVs is currently just 2%, fixed until April 2025, then rising by just 1% each year until 2028. This remains significantly below the anticipated BIK rate for petrol/diesel vehicles, which could exceed 30% by 2028.”

“Our research highlights the strong demand from employees for sustainable workplace benefits, with salary sacrifice the most in-demand eco-friendly benefit for one third (33%) of employees,” added Wright. “Salary sacrifice provides workers with affordable access to a brand-new electric vehicle, which, for many, is an important transport transition they wish to make, but struggle to afford.

“However, there is currently a significant lag behind employee demand for salary sacrifice and employer provision. This presents a crucial opportunity for employers and HR managers to add to their employees’ remuneration package – with minimal cost to the business, but significant effects on talent attraction and retention strategies, as well as wider sustainability goals.”