Half of employees want access to EV salary sacrifice benefit

Half of employees (48%) would like access to an electric vehicle (EV) through a salary sacrifice scheme, with a third (33%) citing it as the most attractive ‘eco-friendly workplace benefit’.

However, with just one-in-three employers (32%) offering salary sacrifice car schemes, the new research, from Volkswagen Financial Services (VWFS) Fleet, suggests businesses are lagging behind employee demand and expectation when it comes to salary sacrifice car schemes.

“A salary sacrifice car scheme – where an employee ‘sacrifices’ part of their gross (pre-tax) salary for a new vehicle – is a highly valued financial benefit for prospective and existing workers,” explained Dan Wright, product manager at VWFS Fleet.  

“At minimal cost to the employer, salary sacrifice offers employees affordable access to a brand new vehicle, with no upfront payments, early termination fees or hidden costs.

“It also includes all extra vehicle costs, including insurance, servicing, maintenance and breakdown cover.”

From a survey of 2,000 employed adults, 79% said that they feel it is important for their employer to be proactive in being a sustainable business.

The VWFS Fleet research also found that 75% of employees want to drive down the emissions associated with their commute, with two-thirds (67%) recognising that salary sacrifice helps to provide affordable access to EVs and a similar proportion (65%) understanding how it helps to reduce personal emissions.

Wright continued: “Salary sacrifice schemes have a crucial role in incentivising EV uptake through attractive tax incentives.

“The benefit-in-kind (BIK) associated with EVs is currently just 2%, fixed until April 2025, then rising by just 1% each year until 2028. This remains significantly below the anticipated BIK rate for petrol/diesel vehicles, which could exceed 30% by 2028.”

VWFS Fleet’s research highlights a key opportunity for employers and HR managers to bolster the employee benefits package to attract and retain top talent.

“Our research highlights the strong demand from employees for sustainable workplace benefits, with salary sacrifice the most in-demand eco-friendly benefit for one third (33%) of employees,” added Wright.

“Salary sacrifice provides workers with affordable access to a brand-new electric vehicle, which, for many, is an important transport transition they wish to make, but struggle to afford.

“However, there is currently a significant lag behind employee demand for salary sacrifice and employer provision.

“This presents a crucial opportunity for employers and HR managers to add to their employees’ remuneration package – with minimal cost to the business, but significant effects on talent attraction and retention strategies, as well as wider sustainability goals.”