Switching to an electric car makes perfect sense for employees across the UK, thanks to the salary sacrifice schemes offered by the top providers like The Electric Car Scheme. If you’re new to the concept or simply looking to understand it better, this guide breaks down everything you need to know, thanks to insights directly from the Electric Car Scheme team.
What is a Salary Sacrifice Scheme?
A salary sacrifice scheme allows employees to exchange a portion of their pre-tax salary in return for a non-cash benefit — in this case, an electric car. By reducing the taxable income, participants can enjoy significant tax savings. These schemes are designed to make electric vehicles (EVs) more affordable and accessible to employees, while also benefiting employers by enhancing their sustainability credentials and employee satisfaction.
MORE> What is a salary sacrifice car scheme
The Founding of The Electric Car Scheme
The Electric Car Scheme was founded in 2020 by Tom Eilon, who faced barriers when trying to lease an EV through existing tax incentives. He was met with overpriced lease deals and a requirement to have over 1,000 employees to access the benefits. Determined to democratize access to affordable EV leasing, Tom launched The Electric Car Scheme to support small and medium-sized enterprises (SMEs) and their employees.
Since then, the company has grown to support thousands of businesses across the UK, ranging from small teams to corporations with tens of thousands of employees.
Key Achievements Of the Company
In 2024, The Electric Car Scheme became the first EV salary sacrifice provider to secure BCorp status, highlighting its commitment to sustainability and social responsibility. The company’s culture is described as “purposeful, progressive, and people-first,” aligning with its mission to create positive change.
How the Electric Car Scheme Works
Eligibility Criteria
- For Employers: Businesses must have been trading for at least two years to qualify for credit. There is no minimum or maximum number of employees required.
- For Employees: Participants cannot fall below the National Minimum Wage (NMW) after salary deductions, as per HMRC rules.
Types of Vehicles Available
The Electric Car Scheme partners with leading leasing providers across the UK. This enables them to shop the market for the best deals on both new and used EVs. Employees benefit from stock deals, special offers, and access to an extensive range of vehicles.
Costs and Administrative Support
- Upfront Costs: There are no upfront costs for employers or employees to participate.
- Employer Support: Employers are provided with a dedicated portal offering monthly payroll instructions, HMRC documentation, and annual impact reports to aid with scope 3 emissions reporting. Each client also receives a dedicated customer success manager.
How Does The Electric Car Scheme Think Businesses Should Compare Schemes?
When choosing an EV salary sacrifice provider, The Electric Car Scheme suggests considering the following:
- Price and Availability: Ensure that the scheme offers competitive prices and a wide selection of vehicles. The Electric Car Scheme’s partnerships with multiple providers help secure the best deals.
- Early Termination Protection: Understand the liabilities and protections in place for early scheme terminations. The Electric Car Scheme’s Complete Risk Protection covers redundancy, dismissal, and resignation (after three months).
- Administrative Support: Opt for a provider that minimizes the administrative burden on employers. The Electric Car Scheme handles most of the administration through its employer portal.
How Does The Electric Car Scheme Early Termination Work?
- Early Termination: Employers are protected from day one against fees for redundancies and dismissals. Resignation fees are covered after three months.
- Maternity and Sick Leave: During maternity leave, employees can keep their vehicles, with costs reimbursed to the employer upon the employee’s return. Sick leave is also covered from day one, with termination fees handled if necessary.
What Is The Charge Scheme?
In 2024, The Electric Car Scheme launched The Charge Scheme, a groundbreaking initiative allowing employees to save on charging costs via salary sacrifice.
- How It Works: Employees opt in to the scheme and receive an app and public charging card. Charging costs are deducted from their gross salary, saving 20-50% on all electric car charging, whether at home, the office, or public stations.
- Coverage: The app supports around 80% of UK charging networks through Plugsurfing and includes savings for unsupported chargers using estimated costs.
Future Plans For The Electric Car Scheme?
In 2025, The Electric Car Scheme is poised for more innovative developments. While details remain under wraps, the company’s track record suggests exciting advancements in sustainable transportation are on the way.
Thank you Electric Car Scheme For Your Insights
We extend our thanks to The Electric Car Scheme team for sharing their insights and expertise on this topic!
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.
