Uptick in UK companies launching EV salary sacrifice schemes

Design consultancy Stantec UK has announced the introduction of a flexible salary sacrifice scheme, designed to encourage employees to use electric and hybrid vehicles.

The scheme, being rolled out in partnership with Fleet Evolution, is available to Stantec’s UK employees providing them with a flexible benefit allowance, which they can choose to use to lease up to two vehicles for two, three or four years.

Stantec joins a long line of UK firms, including Aviva, Centrica, Compass Group and TLT signing onto electric car salary sacrifice schemes, as companies look to achieve their climate change targets, and to increase the perks being offered to employees.

Stantec’s reason for introducing the scheme is “to encourage further behavioural changes within our own operations to support our climate change commitments and targets”, according to Gill Blandin-Ellis, HR director at Stantec.

This comes as EVs reach a tipping point thanks to falling costs, government incentives and changing attitudes towards zero-emission vehicles. In 2020, the UK government announced plans to ban the sale of new petrol and diesel cars by 2030.

ESG-related benefits and boosting employee perks in war on talent

By providing access to electric and hybrid vehicles as part of a benefits package, companies can encourage more environmentally conscious modes of transport and behavioural change, boost their benefits package, and pay less national insurance, while employees get more cost-effective travel.

Introducing a salary sacrifice EV scheme provides an array of ESG-related benefits for employers, according to Matthew Walters, head of consultancy services and customer value at LeasePlan, who describes it as a great boost for companies’ non-financial reporting requirements.

“You’re able to say as part of [the company’s] environmental credentials, that you’re helping the rest of your employee base move out of their internal combustion engine cars and into electric. What a brilliant footnote in your company report.”

The implementation of Aviva’s scheme in partnership with Zenith for the insurance giant’s 16,000 UK employees is part of a range of initiatives designed to support staff to take action on climate change, as it looks to become net zero carbon by 2040, including offering employees 21 hours of volunteering leave a year. While Centrica, which has partnered with LeasePlan to offer the scheme to 25,000 employees, says the move is a “big step towards supporting customers and colleagues to live more sustainability” as the energy multinational aims to reduce its vehicle emissions by making its 12,500-strong operational fleet completely electric by 2025.

Law firm TLT, which launched a scheme in partnership with Tusker for its 1,200 employees did so to engage employees on its net zero journey. “Driving sustainable action is one of our firm’s values, and sustainability is a key part of our growth strategy, with a commitment to be carbon neutral by 2025,” says Maria Connolly, head of clean energy and real estate at the firm.

But sustainability is not the only benefit. At a time when employees are struggling to retain and attract talent, many are boosting their benefits packages, and the EV salary sacrifice scheme ticks that box. According to research by finance firm Maxxia, just over half (51%) of employer respondents who offer electric car salary sacrifice schemes do so to raise employee morale and attract new talent to the business.

Electric vehicle salary sacrifice scheme – how does it work?

A government initiative, the UK’s salary sacrifice scheme is a financial solution offered by an employer to employees through a leasing company, where employees agree to give up part of their salary in exchange for a benefit, in this instance, an electric car.

The scheme allows employees to drive a fully electric car by forgoing a portion of their gross salary, with the amount deducted before tax and national contributions are applied potentially saving them thousands of pounds. The scheme further makes it affordable for employees to go electric – with up to a 30-60% discount.

Take Aviva’s scheme in partnership with Zenith, where an employee paying the basic rate of income tax could sacrifice £350 of pre-tax pay to drive a car listed at £23,500, which works out at a 31% discount due to tax and national insurance savings. The deal includes insurance cover, servicing and maintenance, road tax and breakdown cover.

There are numerous EV car leasing firms that businesses can partner with, many offering turnkey solutions that can be implemented within 4-6 weeks, including comprehensive maintenance and business insurance plans.

Among these are Zenith, LeasePlan, The Electric Car Scheme and Octopus Electric Vehicles. Fleet management provider LeasePlan offers a range of EVs and salary sacrifice levels making it an attractive option for all salary ranges within a company; while The Electric Car Scheme includes protection to the company covering all the cars on the scheme and supports firms with payroll, admin, and finance.

And employees can choose from a full range available across lease providers – a Volkswagen Up! Costs around £150 per month, while a Tesla Model 3 £350 per month.