How do the latest Employer National Insurance changes affect EV salary sacrifice?

You might have spotted a change in the tax landscape earlier this year: Employer National Insurance has had a bit of a shake-up. That might not sound like the most thrilling conversation starter – but stick with us, because it’s good news for your EV salary sacrifice scheme.

In April 2025, two key updates came into effect:

• Employer NI went up a notch, from 13.8% to 15%.
• The threshold dropped too, so employers now start paying NI on salaries above £5,000 a year (previously it kicked in at £9,100).

On the face of it, that means more NI to pay. But luckily, EV salary sacrifice schemes help you claw some of that back.

Whenever someone swaps part of their salary for a car, you don’t pay Class 1 NI on that chunk. And at the new 15% rate, those savings are bigger than before.

Here’s a quick example:

• If an employee sacrifices £500 a month, you save £75 in NI.
• If it’s £1,000 a month, that’s £150 saved.

Multiply that across your team, and suddenly NI doesn’t seem so daunting.

Although EV salary sacrifice reduces Class 1 NI, you do still need to consider Class 1A NI. This applies to benefits you provide to employees, including the cars in your EV scheme.

For 2025/26, Class 1A NI is 15%, and it’s calculated like this:

• Class 1A NI = Car value x Benefit-in-Kind % x Employer NI rate

For example, a £30,000 car with a 3% BiK rate works out at £135.

Class 1A NI is only paid once a year, in July, so it’s easy to plan for.

You can choose to pass some of your NI savings on to your employees through NI passback. It’s a simple way to make the scheme attractive while keeping enough to cover Class 1A NI.

We recommend a 10% passback as a practical default. Here’s how it works:

• You can adjust the passback for new orders.
• Your existing cars (and those that haven’t yet been delivered) stay at the rate we agreed when they were ordered.
• Any changes only happen after you confirm with your Account Manager.

It’s a simple way to balance savings for your business with benefits for your employees.

The April 2025 National Insurance changes may feel like a curveball, but your EV salary sacrifice scheme will continue to deliver value. By reducing Class 1 NI on sacrificed salary and managing Class 1A NI through thoughtful planning, you’ll save your business money and cut your carbon emissions.

At the moment, using a 10% NI passback strikes a practical balance, giving employees a benefit without compromising your savings. Across different car models and values, the scheme consistently reduces overall NI costs, making it a smart, manageable way to support both your team and your bottom line.

That means even with the updated rates, your EV salary sacrifice scheme is a triple win: good for your employees, good for your business, and good for the planet.

As with all things tax related, policy can change. We will regularly review our position on this to make sure that it is accurate and based on the most up-to-date information given to us.