Salary Sacrifice for Employers:
What You Need to Know
What is Salary Sacrifice?
Salary sacrifice is a formal agreement where an employee gives up part of their gross salary in exchange for a non-cash benefit—typically a leased electric vehicle. The arrangement must be documented in the employment contract, with consent, and cannot bring salary below the National Minimum Wage (NMW). Employers must monitor deductions to stay compliant.
Why Offer Salary Sacrifice?
This scheme lets you provide a valuable employee benefit with little to no extra cost to your business. In many cases, it can even generate savings.
Improved duty of care: Reduces reliance on grey fleet vehicles
National Insurance savings: Reduced gross pay lowers employer NI contributions
Minimal admin: Leasing partners handle servicing, insurance, and maintenance
Sustainability support: Encourages zero-emission vehicle use
Is It Right for Your Business?
While salary sacrifice isn’t typically a direct substitute for a traditional company car Salary sacrifice works well alongside existing fleet strategies or for organisations moving away from grey fleet usage. It’s particularly effective for businesses looking to:
- Expand employee benefits across all roles
- Attract and retain staff who previously took cash allowances
- Improve control and reduce risk around business travel
Every business is different. We offer free consultations to assess workforce needs, vehicle preferences, and suitability for your goals.
Points to Consider
Before implementing a salary sacrifice car scheme, employers should keep the following in mind:
- Clear employee communication: Ensure all staff understand the financial and tax implications
- Scheme structure: Decide on vehicle types, mileage limits, and lease durations that reflect company and employee needs
- HMRC compliance: Accurate reporting of Benefits-in-Kind (BIK) is required, along with proper record-keeping
- Exit planning: Account for what happens if an employee leaves or opts out early to avoid unexpected costs
EV Salary Sacrifice: The Smartest Option
Electric vehicles (EVs) offer the greatest tax advantages under salary sacrifice, with a Benefit-in-Kind (BIK) rate of just 2% locked in until April 2025. Employees can access premium EVs for a fraction of the private lease cost.
Things to Watch Out For
While the benefits are compelling, salary sacrifice may not suit every scenario. For example, choosing a high-emission vehicle can increase BIK costs, reducing the scheme’s effectiveness. And since gross salary is reduced, employees should be made aware that this might impact mortgage or credit applications.
Employer Benefits
Sal Sac is a proven way to recruit, retain and reward staff. And because we offer fully-electric vehicles for employees, we can radically reduce your business’s carbon footprint.
Cost-neutral scheme and FREE to set up
Engage, reward and attract employees
Savings on Employer National Insurance
No upfront costs
Shrink your company’s carbon footprint
No admin hassle – maintenance and insurance can be included
Risk-free – schemes are designed to recover costs if an employee leaves
Employer FAQs
We have compiled a list of frequently asked questions to help you find instant answers to your salary sacrifice queries
Are there any tax implications for a Salary Sacrifice Scheme?
A Salary Sacrifice scheme will reduce your cash salary, in turn this reduces your tax liability. It is particularly good for higher earners who pay higher tax and National Insurance..
Are there risks for the business?
Most providers offer protection against common risks like employee resignation or long-term sickness. Agreements are structured to minimise exposure and maintain cost neutrality.
Do we have to handle the admin ourselves?
No. Most schemes are fully managed by the provider, including lease management, insurance, servicing, and early termination protection — reducing the admin burden for your business.
Which employees are eligible?
Generally, those over 18, with a full UK or EU driving licence, earning above the National Minimum Wage after deductions, and employed for a minimum of six months. You can choose who is eligible based on your own criteria too.
Can salary sacrifice work alongside a company car scheme?
Yes. It can complement an existing scheme, especially for employees who’ve opted out in favour of cash allowances. It’s a great way to reintroduce them to a company-backed, low-risk vehicle option.
What vehicles are available through the scheme?
We offer a full range of electric vehicles from all makes and models.
How do we get started?
We offer a free consultation to assess your workforce, review suitability, and help set up a tailored, compliant scheme with full support throughout.
Ready to Learn More?
Get in touch for a free, no-obligation consultation. We’ll help you assess whether a salary sacrifice car scheme aligns with your goals—and guide you through the setup from start to finish.
📞 Call us: 01908 262 662
📧 Email us: sales@webcars.co.uk