About Electric Car Salary Sacrifice

Electric car salary sacrifice is a tax-efficient way for eligible employees to drive a new or used electric car through their employer.

Instead of paying for a car from net income, the employee agrees to give up part of their gross salary in return for an electric company car. This can reduce Income Tax and National Insurance contributions, while the employee pays Benefit-in-Kind tax on the car.

Fleet Alliance helps employers launch electric car salary sacrifice schemes and supports drivers throughout the process, from understanding how the scheme works to choosing and running an electric car.

Want to explore the scheme in more detail?
Learn more about our electric car salary sacrifice scheme, read our salary sacrifice for employees guide, or refer your employer if your company does not yet offer salary sacrifice.

Explore the scheme
Employee guide
Refer your employer

What are the benefits of electric car salary sacrifice?

Electric car salary sacrifice can offer benefits for both employees and employers.

For employees, it can provide a more affordable way to drive a new or used electric car, with monthly payments taken from gross salary before Income Tax and National Insurance are calculated. Depending on the vehicle, salary, tax position and scheme setup, employees may be able to make significant savings compared with an equivalent personal lease.

For employers, an EV salary sacrifice scheme can help strengthen employee benefits, support recruitment and retention, and contribute to lower-emission travel goals.

Fleet Alliance’s electric car salary sacrifice scheme can include servicing, maintenance, UK-wide breakdown cover, insurance options and access to both new and used electric cars.

What should drivers consider before joining?

Salary sacrifice can be highly cost-effective, but it is still a financial commitment.

Before joining, drivers should consider:

• The monthly salary sacrifice amount
• The contract length
• Expected annual mileage
• Benefit-in-Kind tax
• Any impact on pension, salary-linked benefits or borrowing
• What happens if employment circumstances change
• Early termination rules
• Fair wear and tear or excess mileage charges

Drivers should review their employer’s scheme rules and seek independent financial advice if they are unsure about the personal impact.

Are there any risks or limitations?

Yes. A salary sacrifice arrangement must not reduce an employee’s cash pay below the relevant National Minimum Wage or National Living Wage level.

Salary sacrifice may also affect certain salary-linked benefits, pension contributions, statutory payments or mortgage affordability assessments, depending on how the employer operates the scheme and how external providers assess income.

If an employee leaves their employer before the end of the agreement, early termination rules may apply. Fleet Alliance’s electric car salary sacrifice scheme can include early termination protection to help reduce employer risk.

How can I learn more?

For the latest information on vehicle choice, potential savings, what is included, insurance options, used electric cars and how the scheme works, visit our main electric car salary sacrifice scheme page.

Employees can also read our salary sacrifice for employees guide for more detail on eligibility, ordering a car and what to consider before joining.