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  • May 29, 2024

  • 4 min read


The Ultimate Guide to Electric Car Salary Sacrifice for Businesses

Salary sacrifice schemes are becoming more and more popular in the UK - and for good reason.

We explore how salary sacrifice works for employers and employees, the most common types of schemes, and which types are most worth the time and money.

How does salary sacrifice work for employers?

Salary sacrifice is a voluntary arrangement between an employer and employee, where the employee agrees to give up part of their salary in return for benefits of a similar value. The most common types of salary sacrifice schemes are cycle-to-work, childcare, pensions and in our case, electric car leasing.

These schemes are usually easy (and often free) for employers to set up and only take a small amount of admin, and they can be very attractive to employees. Employers just need to make sure they take the deduction from the employee’s salary and report it on their payslips and to HMRC.

It’s important that employers also check that they’re not lowering their employees' salaries to under the national minimum wage by offering the salary sacrifice benefit.

What are the advantages of EV salary sacrifice for employers?

There are loads of advantages of salary sacrifice for employers.

These can include:

  • Reduced National Insurance contributions
  • Better employee retention and motivation
  • Easy admin
  • Helping to reach sustainability goals

Is there a limit on salary sacrifice?

The only limit is that the employees' net pay can’t go below the National Minimum Wage.

Employees who earn more will be able to sacrifice more of their salary and can get bigger tax savings, which is why salary sacrifice schemes are a great way to retain top talent and employees in senior positions.

Are salary sacrifice car schemes worth it for businesses?

Absolutely! An EV salary sacrifice scheme can be a great way to save money on taxes and offer your team the chance to drive a brand-new, environmentally-friendly car.

This is why salary sacrifice schemes are becoming very popular, and we expect to see more employers and employees taking advantage of them in the near future. And remember that with us, you get the whole package:

  • A brand-new electric car
  • A free home charger
  • Servicing and maintenance
  • Breakdown cover

But don’t just listen to us. Take a look at JDE’s review of our salary sacrifice scheme.

How to set up and run an EV salary sacrifice scheme with Octopus EV

Once you’ve given us the go-ahead the process is simple.

First, your business will go through a credit check so we can create a line of credit for your company. This tells us how many cars you’ll be able to get. We’ll work with your finance team to get all of the paperwork over to our credit team. When we've got that, it usually takes less than a week to get a decision.

Once we’ve completed the credit check we’ll send you the paperwork to set up the scheme.

You'll have three simple forms to complete, including an agreement between Octopus Electric Vehicles and your company, a Direct Debit form, and a company sign-up form. Once these have been signed we’ll do some quick compliance checks to make sure everything’s ready.

Once that’s all gone through, you’re good to go!

Can you offer salary sacrifice alongside car allowance?

To put it simply, yes - and we’d highly recommend it!

Offering car allowance alongside salary sacrifice can boost your employees savings and keep your staff happy, and retention rates high.

You can find more about how car allowance and salary sacrifice can work together in our blog: car allowance and salary sacrifice explained.

Want to find out more about EVs and Businesses? Check out our EVs and Businesses Hub.