Analysis by Fleet Evolution has found that over 80% of eligible employees who joined one of its salary sacrifice car schemes were selecting their first ever new car.
The Tamworth-based salary sacrifice and fleet management specialist found that 82% of employees had never owned a new car before. Most were 20%, not 40%, taxpayers – dispelling the myth that salary sacrifice car schemes are only effective for well paid staff who regularly change their cars.
In the overwhelming majority of cases, employees joining a Fleet Evolution car scheme chose an electric car – just 2% selected a hybrid – underlining the effectiveness of salary sacrifice car schemes in providing green mobility for employees who want to reduce their impact on the environment.
A key factor in the decision-making process was the very low prevailing Benefit-in-Kind tax rates on new electric cars, with current BIK rates at 3% and rising to 4% in 2026/27, and the growing numbers of new electric cars entering the market.
“There is this misconception that salary sacrifice car schemes only work for very well-paid employees. But that is not the reality. Salary sacrifice has made a new car affordable for many lower paid employees, and in many cases for the first time,“ said Fleet Evolution founder and managing director, Andrew Leech.
Image: Fleet Evolution | Andrew Leech
“Even the lower paid can benefit from a scheme’s advantages, which include all servicing, tyres, breakdown cover, road fund licence and fully comprehensive insurance,” he added.
Leech said that the Government’s recently announced Electric Car Grant of between £1,500 and £3,750 would have a “dramatic impact” on the affordability of electric cars within salary sacrifice car schemes, making them more accessible still.
“We calculate that the ECG will make electric cars around £50 net cheaper per month. But at the moment we cannot advise customers as to which manufacturers vehicles will be included within the grant as we are as much in the dark as they are.”
Leech went on to say that the most popular electric car for first time buyers/lessees through the scheme was the MG4. “It represents a very attractive package with a high specification and a genuine 200-plus electric mileage,” he said.
Fleet Evolution calculates that employees earning as little as £32,000 can comfortably afford an electric car on salary sacrifice.
Current rules for salary sacrifice schemes state that employees cannot enter into a scheme for any assets if the amount of salary sacrificed takes their take-home pay below the minimum living wage.
However, Fleet Evolution has been lobbying government to have the rules governing salary sacrifice and the lowest paid amended, arguing that the current laws discriminate against the very people they are designed to protect.
“We would like Government to make a minor adjustment to the current rules with a caveat which states that the minimum living wage threshold remains in force, unless the employee opts for and agrees to a beneficial salary sacrifice arrangement which takes them below that level. That would open up electric car ownership to even more prospective employees,” said Leech.
