How Do I Choose the Best EV Salary Sacrifice Scheme?

Choosing an electric car through salary sacrifice can potentially save you a significant amount of money, but choosing the right salary sacrifice scheme isn’t simply about finding the lowest monthly price.

The tax advantages work in broadly the same way whichever scheme you use. You sacrifice part of your gross salary in return for an electric car, reducing the salary on which Income Tax and National Insurance are calculated, while paying the relatively low Benefit-in-Kind (BiK) tax applicable to EVs.

Where schemes can differ significantly is everything surrounding that calculation.

Insurance, servicing, maintenance, tyres, early termination protection, vehicle choice, charging, customer support and even what happens if your personal circumstances change can vary between providers.

So, if your employer offers EV salary sacrifice – or is considering introducing it – what should you actually look for?

Here are the most important things to compare.

1. Look at the real monthly cost, not the headline saving

Start with the numbers.

Salary sacrifice providers sometimes advertise the percentage you could potentially save compared with obtaining a car privately. Those figures can be useful, but they won’t necessarily represent the saving you’ll personally receive.

Your actual cost depends on factors including your salary, tax band, chosen EV, Benefit-in-Kind liability and the particular agreement.

A good scheme should make it easy to understand:

• the gross amount being sacrificed;
• your estimated Income Tax and National Insurance savings;
• the applicable BiK tax;
• your estimated reduction in take-home pay; and
• exactly what is included for that amount.

It’s the reduction in your take-home pay that is particularly useful when comparing salary sacrifice with obtaining a car privately.

The Electric Car Scheme says its employees typically save between 20% and 50% compared with leasing privately, but individual savings vary. That’s why a personalised calculation is much more useful than choosing a provider based on an advertised maximum percentage.

2. Check exactly what’s included

Two EV salary sacrifice quotes showing similar monthly figures aren’t necessarily offering the same product.

One of the attractions of salary sacrifice is that providers can bundle many of the costs of running the vehicle into the agreement.

Depending on the scheme, this can include:

• comprehensive motor insurance;
• servicing;
• maintenance and repairs;
• replacement tyres;
• breakdown cover; and
• road tax where applicable.

The Electric Car Scheme includes insurance, servicing and maintenance, tyres and breakdown cover within its package. Other established providers, including Octopus Electric Vehicles and Tusker, also offer inclusive packages.

The important thing isn’t therefore whether a provider describes its package as “all-inclusive”. It’s establishing precisely what its definition of all-inclusive actually covers.

If you’re comparing salary sacrifice with a personal lease, remember to add equivalent running costs to the private lease before deciding which represents better value.

A £400 lease plus £80 insurance and additional servicing, tyre and breakdown costs isn’t necessarily cheaper than a £450 salary sacrifice package that already includes them.

3. Pay particular attention to early termination protection

This is one of the most important differences between EV salary sacrifice schemes – and one of the easiest to overlook when you’re excited about choosing the car.

Salary sacrifice is connected to your employment. But what happens if you leave your employer before the end of a three or four-year agreement?

Providers can offer early termination or lifestyle protection, but don’t assume every policy works in the same way.

Check:

• which circumstances are covered;
• whether resignation is included;
• what happens if you’re made redundant;
• whether long-term sickness is covered;
• whether there is an initial exclusion period;
• whether an excess applies; and
• who is responsible for any remaining termination charge.

Some schemes provide considerably broader protection than others.

The Electric Car Scheme’s Complete Employer Protection, for example, is designed to cover circumstances including resignation, redundancy, dismissal, parental leave, long-term sickness, loss of licence and death.

ECS says its protection has no exclusion periods, excesses or usage caps.

Tusker also provides lifestyle protection against certain early termination circumstances, illustrating why this isn’t simply a question of whether a provider offers protection – you need to compare the actual terms.

It may not be the most exciting part of choosing your next EV, but on a multi-year agreement it’s arguably one of the most important.

4. Find out what happens if your life changes, not just your job

Employment isn’t the only thing that can change during a three or four-year car agreement.

Divorce, illness within your household or an unexpected reduction in household income could make a monthly commitment that was once affordable much more difficult.

This is an emerging area of differentiation between salary sacrifice schemes.

The Electric Car Scheme has introduced Employee Life Event Support, which extends protection beyond employment-related events.

Qualifying circumstances include divorce or dissolution of a civil partnership, a partner’s redundancy, long-term sickness or death, an involuntary salary reduction of 20% or more and an intra-company transfer overseas.

Where a qualifying event occurs, ECS says the employee can return the vehicle without an early termination penalty.

ECS describes this employee-focused protection as a UK salary sacrifice industry first.

Hopefully you’ll never need to use this type of protection. But that’s rather like insurance itself: its value becomes apparent when something unexpected happens.

When comparing schemes, it’s therefore worth asking a simple question:

What happens if I can afford this car today, but something outside my control changes two years from now?

The answer may expose a significant difference between two otherwise similar quotes.

5. Compare the choice of cars – including used EVs

A large new-car range is useful, but don’t automatically assume you need a brand-new EV.

Used electric cars are increasingly available through salary sacrifice and can substantially reduce the monthly cost.

This can be particularly useful for employees who like the tax advantages of salary sacrifice but don’t want to commit several hundred pounds each month to a brand-new EV.

Provider business models can affect the choice available.

The Electric Car Scheme operates as a broker and can access used EVs from a broader pool of leasing providers rather than relying on stock from a single source. It says hundreds of used EVs can be available across different manufacturers, models and budgets.

ECS says its used EVs typically cost around 30–40% less than equivalent new vehicles, while retaining the same inclusive package covering insurance, servicing and maintenance, tyres and breakdown cover.

It also works with EV battery specialist ClearWatt to provide an individual real-world range figure for its used vehicles before they’re ordered.

If you’re comparing schemes, therefore, don’t just ask “How many cars do you have?”

Ask whether the provider offers new and used EVs, how those cars are sourced, what warranty remains and what information is available about a used vehicle’s battery and real-world range.

6. Look at charging as well as the car

It’s easy to concentrate entirely on the vehicle and forget that you’ll be paying to charge it for the next few years.

So investigate what charging support is available.

Does the provider help arrange a home charger? Does it offer access to public charging? Are there preferential charging tariffs or other charging benefits?

Some schemes are beginning to integrate charging more closely with salary sacrifice itself.

The Electric Car Scheme’s Charge Scheme, for example, allows eligible employees to salary sacrifice EV charging costs as well as the car.

This can include charging at home, at work and on public charging networks, while the cost of installing a home charger can also be incorporated where required.

That potentially extends the tax advantages beyond obtaining the vehicle to part of the cost of actually running it.

It’s particularly worth investigating if you expect to cover a high annual mileage or rely heavily on public charging, where electricity can cost considerably more than charging at home.

7. Check the insurance rather than assuming you’re covered

Insurance being “included” sounds straightforward, but it’s still worth investigating the details.

Check who can drive the car, eligibility criteria, excesses and any restrictions that could affect you.

This can be particularly important if you need a partner or family member to use the vehicle.

It is also worth considering what happens if your insurance circumstances change during the agreement.

The value of inclusive insurance will vary significantly between drivers. Someone who would otherwise pay a substantial annual premium could find it materially changes the financial case for salary sacrifice.

When comparing providers, therefore, don’t simply put a tick next to “insurance included”. Check whether the policy actually suits your circumstances.

8. Check servicing, tyres and breakdown cover

These might sound like relatively minor details compared with the price of an EV, but over a three or four-year agreement they can add up.

Electric cars generally have fewer moving mechanical components than petrol or diesel cars, but they still require routine servicing and maintenance.

Tyres are particularly worth considering.

EVs can be relatively heavy and deliver significant amounts of instant torque, both of which can contribute to tyre wear. Replacement tyres for larger EVs can also be expensive.

Check whether routine servicing, maintenance and replacement tyres due to normal wear are included and whether breakdown assistance is provided.

The more running costs that are genuinely included, the easier it becomes to budget because your salary deduction represents a much larger proportion of your actual motoring expenditure.

9. Consider customer support – particularly if it’s your first EV

Salary sacrifice is a financial product wrapped around a car, so there are potentially two sets of questions to answer.

You might need help understanding the tax calculation and agreement, but you could equally need advice about the EV itself.

How do you arrange servicing? What happens if the car develops a fault? Who do you contact after an accident? How do you arrange replacement tyres? What happens if you can’t charge?

For somebody switching to electric driving for the first time, support around home charging and public charging can be particularly valuable.

Look at how the provider supports employees after the car has been delivered, rather than judging the service solely on how easy it is to order one.

Reviews can also be useful here, although we’d concentrate on patterns rather than individual exceptionally positive or negative reviews.

Look particularly at what existing customers say about resolving problems. Almost any company can provide a smooth experience when everything goes to plan; good customer service becomes more important when it doesn’t.

10. Don’t forget what your employer gets from the scheme

Although you’re ultimately choosing a car, your employer chooses the salary sacrifice provider.

That makes the employer side of the proposition important too.

A scheme that creates significant administration for HR and payroll is unlikely to be attractive, however good the vehicle offers appear.

Employers should look at implementation support, payroll integration, employee communications, account management and what financial risk they could potentially retain if an employee leaves.

Early termination protection is particularly relevant here because, depending on how a scheme is structured, the employer could otherwise face costs when an agreement ends unexpectedly.

The Electric Car Scheme’s Complete Employer Protection is specifically designed to address this risk, while its broker model gives employers access to vehicles from multiple leasing partners.

If you’re an employee whose company doesn’t currently offer salary sacrifice, these are useful points to raise when suggesting a scheme internally. The decision isn’t simply about whether employees can save money; the arrangement also needs to work for the employer.

11. Don’t choose a provider based on one feature

There are several established EV salary sacrifice providers in the UK, including The Electric Car Scheme, Octopus Electric Vehicles and Tusker, and their propositions aren’t identical.

One might have a particularly attractive price on the EV you want. Another might offer broader vehicle availability. Charging benefits, insurance arrangements, customer support and early termination protection can also differ.

That’s why we’d be wary of declaring that one scheme is automatically “best” for every employee and employer.

Instead, compare the complete proposition.

A useful checklist is:

Cost: What will actually happen to my monthly take-home pay?

Inclusions: Are insurance, servicing, maintenance, tyres and breakdown cover included?

Protection: What happens if I leave my job or my circumstances change?

Vehicle choice: Are both new and used EVs available?

Charging: Is there help with home and public charging, and can any charging costs be salary sacrificed?

Insurance: Who is covered and what restrictions apply?

Support: What happens when I need help after the car has arrived?

Employer protection: What financial or administrative risk remains with my employer?

The answers give you a much more useful comparison than simply sorting cars from the lowest monthly payment to the highest.

So, how do you choose the best EV salary sacrifice scheme?

There isn’t necessarily one EV salary sacrifice scheme that’s best for everybody.

The right scheme should offer a competitive price on the car you want, but that’s only the starting point.

Look closely at what’s included, how transparent the take-home-pay calculation is, the range of cars available and the support you’ll receive throughout the agreement.

Then spend some time on the things you hope won’t happen.

What if you leave your job? What if you’re made redundant? What if your household finances unexpectedly change? What happens if the car needs repairing or you need to end the agreement early?

Those questions can expose differences between providers that aren’t immediately visible from the monthly price.

The Electric Car Scheme has some notable features in these areas, including its Complete Employer Protection and Employee Life Event Support, access to used EVs through its broker model and the ability to salary sacrifice eligible charging costs through The Charge Scheme.

Other providers have their own strengths and packages, so compare what’s relevant to you rather than choosing on brand or headline saving alone.

Ultimately, the best EV salary sacrifice scheme is the one that offers good value when things go right and adequate protection and support if they don’t.

FAQs

What should I compare between EV salary sacrifice schemes?

Start with the actual reduction in your take-home pay rather than the gross salary sacrifice amount. Then compare insurance, servicing, maintenance, tyres, breakdown cover, vehicle choice, charging support, early termination protection and customer service.

Are all EV salary sacrifice schemes basically the same?

No. The underlying tax treatment is broadly similar, but providers can differ considerably in pricing, vehicle availability, included services, insurance, early termination protection, charging benefits and support.

Should I choose the cheapest EV salary sacrifice scheme?

Not necessarily. Compare the total package rather than the monthly figure alone. A slightly cheaper scheme could prove worse value if it offers less comprehensive insurance, fewer included running costs or weaker protection if you need to end the agreement early.

What happens if I leave my job with a salary sacrifice car?

It depends on your scheme. The agreement is linked to your employment, so leaving can result in the vehicle being returned and potentially an early termination charge. Some providers offer protection against qualifying circumstances, but what’s covered and any restrictions can vary.

Can I get a used electric car through salary sacrifice?

Some providers offer used EVs. The Electric Car Scheme, for example, uses a broker model to access used cars from multiple leasing providers. Used EVs can reduce the underlying vehicle cost while retaining the tax advantages of salary sacrifice.

Can EV charging be salary sacrificed?

It can be under some arrangements. The Electric Car Scheme’s Charge Scheme allows eligible employees to salary sacrifice qualifying home, workplace and public EV charging costs, as well as home charger installation where required.

Does EV salary sacrifice include insurance and servicing?

Many schemes include them, but don’t assume they all provide identical cover. Check insurance eligibility and restrictions alongside servicing, maintenance, tyres and breakdown cover before comparing the total cost of different schemes.

John Ellmore

John is the Editor and Spokesperson for Electric Car Guide.

With over 20 years of writing experience, he has written for titles such as City AM, FE News and NerdWallet.com, covering various automotive and personal finance topics.

John’s market commentary has been covered by the likes of The Express, The Independent, Yahoo Finance and The Evening Standard.