7 Reasons Why Small Businesses Should Offer EV Salary Sacrifice

Businesses of all sizes are rethinking their approach to employee benefits, particularly when it comes to company cars. One option gaining traction, even among small businesses, is salary sacrifice schemes for Electric Vehicles (EVs).

But why should a small business consider offering this benefit? Here are some compelling reasons:

1. Support Your Sustainability Goals

Sustainability is no longer just a buzzword; it’s a business imperative. Offering EVs through salary sacrifice can help a small business reduce its overall carbon footprint. If you supply the NHS, or have government procurement contracts, you’ll be in the know about PPN 06/21 which includes emissions from employee commuting.

Even if you are not yet in need of a compliant carbon reduction plan, switching to EVs aligns your business with future regulations and the broader environmental goals. Not only does this enhance your company’s green credentials, but it also prepares you for a future where sustainable practices will likely become mandatory.

By supporting employees to switch to EVs, your small business is contributing to cleaner air and a healthier environment. This can also enhance your brand’s reputation.

2. It’s Cost-Effective for Employees

Salary sacrifice works by allowing employees to give up a portion of their pre-tax salary in exchange for non-cash benefits, such as an EV. Because the payment is taken from gross salary, employees benefit from paying less income tax and National Insurance, making EVs more affordable than if they were purchased outright. For many employees, the opportunity to drive a brand-new, eco-friendly car at a reduced cost is a highly attractive perk. We recommend Octopus EV who will install a home charger for free and offer 4,000 miles of charging. They also offers some great deals for nearly new EVs.

3. There are Tax Savings for Your Business

There are also financial benefits for small businesses. When offering salary sacrifice for EVs, employers reduce the amount of National Insurance Contributions (NICs) they have to pay. Since contributions are based on employees’ salaries, a reduction in gross pay also leads to a reduction in the NICs owed. This creates a win-win situation where both the employer and the employee save money.

Additionally, the UK government offers favourable Benefit-in-Kind (BiK) rates for electric vehicles. As of now, the BiK rate for zero-emission vehicles is just 2%, significantly lower than for petrol or diesel cars, making the scheme highly tax-efficient.

4. You’ll Attract and Retain Talent

In a competitive job market, employee benefits play a significant role in attracting and retaining skilled workers. Offering a salary sacrifice scheme for EVs not only helps your business stand out but also shows a commitment to sustainability—something increasingly valued by the modern workforce. Employees want to work for companies that align with their values, and environmental responsibility is high on the list. A salary sacrifice scheme makes it easier for employees to afford an EV, enhancing your overall benefits package.

5. Give Employees a Boost

Aside from the financial savings, electric vehicles are easier and cheaper to run. They have lower fuel and maintenance costs compared to petrol or diesel cars. Offering EVs as part of a salary sacrifice scheme helps make EV ownership more accessible, providing a tangible benefit to your team.

Additionally, many areas now have incentives like access to low-emission zones. These perks add extra value to the scheme, further enhancing the appeal for employees.

6. Future-Proof Your Fleet

For small businesses that provide company vehicles, salary sacrifice schemes for EVs offer an easy way to future-proof your fleet. With the government’s plan to ban the sale of new petrol and diesel vehicles by 2035 in the UK, moving towards electric alternatives is a smart, proactive step. By starting now, your business can stay ahead of the curve, ensuring compliance with future regulations while demonstrating a forward-thinking approach.

7. It’s Simple to Set Up

You may assume that setting up a salary sacrifice scheme is complex or administratively burdensome, but it’s actually quite straightforward. Providers like Octopus EV can help you with everything from vehicle selection to leasing and paperwork, allowing small businesses to implement the scheme without getting bogged down in details.

Conclusion

For small businesses, offering salary sacrifice for EVs is more than just a tax-efficient way to save money—it’s a strategic decision that can enhance your employee benefits, demonstrate corporate social responsibility, and prepare your company for a greener future. With minimal administrative overhead and significant potential savings, this is a benefit that makes sense for both employers and employees alike.

By embracing electric vehicles, your business can drive into a more sustainable, cost-effective future while positioning itself as a forward-thinking and responsible employer.