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24 Apr 2024

Why electric car salary sacrifice holds multigenerational appeal

In a 2023 survey by a leading fleet car publication, 40% of 5,000 employees surveyed said salary sacrifice was the most important benefit

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Today’s businesses and organisations benefit greatly from diversified workforces, bringing different skills, experiences and ideas. As retirement age has increased for both men and women – and is set to increase further from May 2026 – multigenerational teams are becoming more widespread.

Meeting the wellbeing needs of a multigenerational workforce means offering benefits that are universally appealing. Like an electric car salary sacrifice scheme.

An electric car salary sacrifice scheme is a mutually beneficial arrangement designed to encourage employees to use electric vehicles. The scheme allows them to exchange a portion of their gross salary in return for an electric car, leased by their employer.

Employers typically partner with a specialist leasing company to procure the electric vehicles and provide them to eligible employees as a wellbeing benefit.

The lease agreement usually covers the cost of the vehicle and maintenance. Insurance and home chargers are often offered too.

By participating in the scheme, employees can enjoy significant savings on the monthly lease price, running costs and Benefit in Kind taxation. Indeed, it’s fair to say that for some employees, the scheme is the only way they’d ever be able to drive a brand-new electric vehicle.

A universally popular benefit

Research shows that an electric car salary sacrifice scheme is a popular wellbeing benefit. In a 2023 survey by a leading fleet car publication, 40% of the 5,000 employees surveyed said salary sacrifice was the most important benefit, ahead of pensions and flexible working.

The same survey found that 55% of employees would not have opted for an electric car had it not been provided through a car salary sacrifice scheme, while 78% said the cost savings were the main factor in their decision.

Such was the scheme’s popularity, 62% said they wouldn’t move to another company that did not offer salary sacrifice cars as an employee benefit.

Indeed, as awareness of the benefits grow, employees themselves are driving adoption, asking employers to implement a scheme.

How electric car salary sacrifice can work for everyone

Implementing an electric car salary scheme can have numerous benefits for employers and employees alike.

1. Inclusive culture

In the past, company cars may only have been offered to more senior members of staff. By offering wellbeing benefits that are accessible and relevant to employees of all ages, organisations can create an inclusive work culture where everyone feels valued and rewarded.

2. Attract, retain and motivate employees

Electric car salary sacrifice is popular with employees in lots of ways, from saving money to living more sustainably, and can help to boost talent attraction, retention and engagement levels.

3. Cost savings

Employees can benefit from considerable cost savings. By opting into salary sacrifice, they can reduce their income tax and National Insurance contributions, saving up to 40% on the cost of a new electric car lease.

Unlike some petrol and diesel cars whose Benefit in Kind rates can be up to 37%, the current rate for electric cars is just 2%, fixed until April 2025.

Electric cars are also exempt from road tax until 2025 and Clean Air Zone charges such as ULEZ.

4. No deposit or credit checks

Since all cars are leased by the company, employees don’t have to pass a credit check or pay a deposit.

5. Sustainability values

Many employees today, especially younger ones, are increasingly environmentally conscious. Electric cars emit zero exhaust emissions and can support sustainable values, while boosting an organisation’s environmental, social and governance goals.

As Guy Spence, MD of electric car salary sacrifice specialist Electrix, says: “We know from our own customers, that an electric car salary sacrifice scheme is an increasingly popular wellbeing benefit.

“By catering for the diverse needs and preferences of employees across different age groups, organisations can strengthen their employer brand.

“Best of all, it’s easy to set up and manage a scheme that’s right for your organisation.”

To find out more about electric vehicle salary sacrifice schemes, contact Electrix.

In partnership with ElectriX

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