How to make electric car ownership an employee benefit

Offering employees new electric cars at a fraction of their list price is an eye-catching recruitment and retention tool, but firms must scrutinise the fine print attached to such schemes

A young business man speaks on the phone while waiting for his EV to charge

With 73% of UK workers wanting financial support from their firms on top of their pay, according to YouGov research published by Octopus Electric Vehicles, a tax-efficient scheme offering employees heavily discounted new EVs could prove a key weapon in the war for talent. 

In essence, it’s a salary-sacrifice arrangement under which the employer leases an EV from the provider and offers this as a benefit. The employee then pays for the vehicle with a portion of their gross salary, thereby reducing their income tax and national insurance payments. Many packages will also cover the cost of domestic charging equipment, maintenance, insurance and breakdown cover.

But there are crucial details that employers and employees must be aware of before taking the plunge, warns John Ellmore, founding editor of Implementing such schemes will require extra administrative work, for instance, while early-termination fees and the impact on employees’ overall salaries are two key considerations.

What employers and employees should know before signing up

“On the employer’s side, early-termination fees are the biggest risk. If a participating employee leaves their job or faces redundancy before the end of the lease term, it could become liable for such fees. Depending on the scheme’s early-termination protection (ETP) terms, the employer may be obligated to bear these costs or cover the remaining lease payments,” Ellmore explains. 

But he adds that “a reputable provider will work hard with companies to ensure that this doesn’t happen. It may offer options for other staff to take on the lease or, potentially, have the arrangement transferred to the employee’s new place of work.”

It’s difficult to find benefits that will appeal to lots of people. Gym memberships, for example, aren’t for everyone

Ellmore stresses the importance of scrutinising a potential provider’s ETP coverage. It should be an effective safeguard that mitigates the financial risk run by both employer and employee, ensuring the fair and structured handling of early terminations.

“It’s crucial to ensure that this is balanced, offering adequate protection to the business and its employees without leading to inflated lease rates. A fair and practical ETP policy is a sign of a provider’s commitment to all parties’ interests,” he says. “Be wary if a provider does not publish ETP details on its website or is unable to clearly explain them when you ask the question.”

Participating employees must also consider the financial impact of a smaller gross salary. A reduction in take-home pay might limit their ability to obtain a home loan, for instance. If it would cause their salary to fall below the national minimum wage, it wouldn’t be legal for them to proceed with the scheme. And, while there are tax efficiencies associated with salary-sacrifice schemes, employees must pay a benefit-in-kind tax on their EVs. This is currently 2% of the vehicle’s list price, but is set to rise to 3% in the tax year 2025-26.

What does an EV salary-sacrifice scheme cover?

Amtivo Group, a provider of certification assessment services, introduced an EV salary-sacrifice scheme through Octopus early last year. The firm hosts regular webinars about the initiative and frequently posts about it on the intranet to keep staff informed. So far, 60 of its 300 employees have taken up the option. 

The company’s external HR partner, Kiya O’Brien, has been impressed by how straightforward and comprehensive the scheme has proved.

“The package covers insurance, breakdown cover and the cost of the charger to be installed at the employee’s house,” she says. “If they can’t accommodate a charger, they will be given a prepaid card to use at public charging points, so they get the equivalent in miles.” 

Q&A: Is an EV salary-sacrifice scheme right for your business?

John Ellmore, founding editor of, discusses what firms should consider when deciding on an EV scheme

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O’Brien adds: “When we kicked off with this scheme, it was for brand-new vehicles only. It’s introducing some used vehicles now, so people don’t necessarily have to go for something that might be a bit beyond their budget.”

Although EV charging facilities have been installed at Amtivo’s offices in West Malling, Kent, employees must pay to use these. But the firm’s hybrid working policy means that they’re required to visit HQ only two days a week. 

Most participants are grateful for the opportunity the scheme has given them to save money, according to O’Brien.

“If you were to go and get a new EV off your own back, they do tend to be more expensive than a petrol or diesel equivalent. The salary-sacrifice scheme definitely helps, because the savings are there straight away,” she says. “And charging an EV costs nowhere near the same amount as fuel. The feedback I’m getting from people is that they’ve seen a big reduction in their outgoings.”

How EVs fit into the wider benefits offering

Amtivo hopes that offering an EV ownership scheme as part of its benefits package will help the firm in its bid to become a B Corporation.

Having purchased numerous businesses in recent years, the group has built a particularly diverse workforce, “with employees at several different life stages”, O’Brien notes. It’s therefore been “hard to work out what the right benefits to offer are” as the organisation seeks to consolidate its various acquisitions. 

“It’s difficult to find benefits that will appeal to lots of people. Gym memberships, for example, aren’t for everyone,” she says. “But we had a lot of queries about this scheme over the 12 months leading up to its launch, so we knew that the appetite for it was already there. It’s one of those things that’s accessible to everybody.”

How attractive is a salary-sacrifice scheme when inflation is high?

When network security specialist Beyond Encryption launched its EV salary-sacrifice scheme a year ago, its main motivations were to offer an attractive benefit that would help employees to both save money and live more sustainably. Only two of the firm’s 20-strong team have signed up so far. But CEO Paul Holland is keen to give the scheme more time to gain traction.

While he is disappointed with the slow uptake, Holland accepts that employees might be reluctant to sacrifice a portion of their take-home pay while the rate of inflation is still relatively high. 

“In this economic climate, people haven’t been changing their cars as frequently. With the cost of living rising so much, it’s been tough out there,” he says. “But this scheme offers one of the only really tangible cost savings that you can actually feel. I’m not sure that anything else would give the same financial incentive at a practical level.”

Ellmore agrees that an EV salary-sacrifice scheme would be an attractive addition to any employer’s benefits package, especially given the sustainability angle.

“It can be a real boost for attracting and retaining talent,” he argues. “Such schemes reflect a commitment to offering competitive – and modern – benefits.”