Surge in fleets offering salary sacrifice schemes, research finds

Low tax rates on electric vehicles (EVs) has resulted in an increase – now 53% compared to 39% 2020 - in employers offering salary sacrifice to non-company car drivers, new research shows.

According to the 2021 Arval Mobility Observatory Barometer, last year, a fifth (20%) of fleets said they were offering some form of finance solution, but this has also risen to more than a third (37%).

In addition to salary sacrifice, the car schemes offered by employers surveyed included a cash allowance (55%) and personal contract hire (39%).

Shaun Sadlier, head of Arval Mobility Observatory in the UK, said that the zero or low benefit-in-kind (BIK) tax rates on electric cars introduced by the Government in April 2020 had powered the majority of this increase in salary sacrifice schemes.

He said: “Low taxation on EVs has made salary sacrifice a very attractive option for employees and employers, meaning that the latest, most advanced and environmentally-friendly cars can be offered to staff at extremely attractive monthly rates.

“This increase is concentrated among larger employers with more than 500 employees, something that is probably to be expected. Setting up schemes of this kind may not be as high a priority for smaller businesses– although there is impetus within Arval to increase their viability for SMEs."

NHS Fleet Solutions has ordered 500 Nissan Leafs for its salary sacrifice scheme, which will be available to health workers and other public sector staff.

Sadlier added: “We could potentially see salary sacrifice continue to accelerate further in the coming years. It provides a means for employers to offer the considerable benefit of new EVs to their employees at little to no cost to their company and will continue to do so if benefit in kind taxation remains low.

“What we are seeing emerging is a definite future mobility role for EV-based salary sacrifice as a key element in a wave of new benefits initiatives that are designed to bring innovative options and ideas into play for employees, with only a very limited investment required by their employer.”

Tusker recently delivered the 500th EV to EDF funded through its salary sacrifice scheme.

Do you offer any of the non-company car drivers in your company a soltuion to enable them to finance a personal car? (2021 Arval Mobility Observatory Barometer)

Which finance solution do you offer to your employees?

2020 data included in brackets in both tables