By Thom Groot is CEO of The Electric Car Scheme
The recent confusion around autumn Budget speculation has highlighted just how critical it is to understand what EV salary sacrifice actually delivers – and why it matters so much to both employers and employees navigating the transition to cleaner, more affordable transport. One thing is clear – EV salary sacrifice is a force for good.
Not all salary sacrifice is created equal
It has been reported that the Chancellor is drawing up plans for a £2bn raid on pension salary sacrifice schemes, with the exemption expected to be capped at £2,000 per employee per year.
Any further contributions would be subjected to standard national insurance rates – eight per cent on salaries under £50,270 and two per cent on any income above that.
This represents a significant shift for pension schemes, which have allowed employees earning over £100,000 to reduce their income tax bills by exchanging salary for higher pension contributions. These proposed pension changes would increase costs for both employers and employees, particularly after national insurance contributions were hiked from 13.8% to 15% in April.
Crucially, EV salary sacrifice schemes are not expected to face any such restrictions. This distinction matters enormously.
A different kind of salary sacrifice
While pension salary sacrifice primarily benefits higher earners building personal wealth, EV salary sacrifice serves an entirely different purpose. It helps middle-income working families – 52% of those who have used EV salary sacrifice are basic rate taxpayers – access cleaner transport they otherwise couldn’t afford, delivering positive health and societal outcomes that benefit everyone.
Our research shows that employees who have access to EV salary sacrifice schemes are 3-4 times more likely to make the switch over those without access to financial support.
The numbers tell a compelling story. Salary sacrifice schemes have already helped 680,000 drivers make the switch to EVs. Last year, 20% of new cars sold were electric and 40% of them were acquired through these schemes.
With 51% growth in uptake during 2024 alone, salary sacrifice is rapidly becoming the largest catalyst of EV adoption in the UK. This isn’t some niche benefit – it’s fundamentally reshaping how ordinary working families access clean and affordable transport.
Significant savings of between 20-50% make EVs genuinely affordable for employees who would otherwise be priced out of the electric vehicle market entirely. When you consider that 63% of non-EV drivers cite upfront cost as the biggest barrier to going electric, it’s clear that salary sacrifice is solving a real problem for real people.
Positive for employers, transformative for employees
For employers, EV salary sacrifice schemes are remarkably straightforward to administer – far simpler than navigating the complexities of pension reforms.
The recent increase in employer National Insurance has actually made the National Insurance savings more attractive, driving 160% year-on-year growth in interest in our EV scheme.
Whilst pension salary sacrifice changes would increase the financial pressure on employers and damage retirement savings, EV schemes are set to remain untouched, offering a stable, easily implemented benefit that supports broader corporate sustainability goals without adding complexity or unexpected cost increases.
For employees, the benefits extend far beyond the monthly savings. Salary sacrifice is now making charging more affordable too, with schemes bringing the cost of public charging below the equivalent price per mile of petrol cars for the first time.
This is particularly crucial for employees without access to reliable off-street parking or home charging infrastructure – precisely the people who’ve historically been excluded from the EV revolution.
Second-hand EVs now make up nearly half of salary sacrifice sales, further democratising access to electric vehicles and addressing the cost concerns that have held back widespread adoption.
Policy certainty and future potential
The government has already confirmed that EV salary sacrifice will remain in its current form until at least April 2030, providing the policy certainty that both employers and employees need to plan confidently.
This stability stands in marked contrast to the speculation around other salary sacrifice arrangements and should give HR professionals the confidence to promote these schemes actively within their organisations.
Looking ahead, the potential extends beyond vehicles. A letter signed by 92 Labour MPs has called for salary sacrifice to be expanded to include solar panels and heat pumps – measures estimated to boost the UK economy by £8 billion and create 50,000 jobs. This demonstrates the model’s proven effectiveness as a tool for accelerating green technology adoption.
A question of priorities
With more than 300,000 EVs expected to be leased through these schemes in 2026 alone, we’re looking at a genuine transformation in how working families access clean transport.
EV salary sacrifice isn’t just about individual benefit – it’s about collective progress toward net zero. These schemes deliver tangible health and societal benefits through reduced emissions whilst making electric vehicles accessible to middle-income families who are trying to do the right thing.
