Electric car salary sacrifice scheme
elmo has launched the UK’s first, fully-managed salary sacrifice scheme for electric cars on subscription.
Employer or employee?
Looking for specific information as an employer or employee? Click on the links below to read our handy guides.
Salary sacrifice explained
Watch our short video below which explains exactly how our salary sacrifice scheme works, and how this could benefit both employers and employees.
What is Salary Sacrifice?
A salary scheme in the UK allows employees to “sacrifice” some of their gross salary in return for an electric car which is hired on subscription from elmo by their employer.
Instead of subscribing directly and paying for the car from post-tax pay, the monthly subscription cost is taken from pre-tax pay which reduces the employee’s tax liability and allows them to save an astonishing 30-60% of the cost (depending on their salary).
Salary sacrifice cars are not company cars but are still viewed as an employee benefit by HMRC. This means that the car’s value as a benefit-in-kind (BIK) is taxable. The BIK rate on electric car set by HMRC is currently very low (2% until April 2025, then rising by 1% each year to 5% in April 2028) making salary sacrifice one of the most affordable ways to go electric.
These savings help make the switch to electric cars not only possible, but also attractive for many. As a result, more and more businesses are using salary sacrifice to attract and retain talent while supporting a greener future.
What are the benefits of getting an electric car through salary sacrifice?
There are plenty of benefits to setting up an electric car salary sacrifice scheme on subscription, both for the employer and the employee.
Benefits for employers:
- Attract and retain the best talent with a high value perk
- Improve the environmental impact of your workforce
- Enjoy the total convenience with elmo managing the scheme set up and all payroll & HMRC admin
- Avoid the risk and cost of early termination compared to a lease
- Pay nothing extra – there is no net cost to your business for elmo operating the scheme
- Read our employer guide to salary sacrifice for more information
Benefits for the employees:
- An all-inclusive package that includes insurance, vehicle excise duty, MOT, service, breakdown and more
- Save 30-60% on the cost of an electric car subscription & public charging with elmoCharge if you add as a bolt on
- Choose from the largest range of subscription electric cars on the market
- Enjoy total flexibility by avoiding multi-year lease contract
- Upgrade your car whenever you like
- Read our employee guide to salary sacrifice for more information
These benefits are all on top of the fantastic benefits experienced by electric car drivers, including attractive savings on fuel costs, congestion charges, and more.
Sounds great doesn’t it? Read our list of all the pros and (a few!) cons before getting started.
What our customers have to say
We’ve been very happy with our experience with elmo’s salary sacrifice scheme. Everything has been very simple since day 1, and the team are very helpful. The quote process is straightforward, so it’s easy for the team to know exactly how much the vehicle will cost them, and it’s a great benefit to help attract new staff….
Adam Clancey, Funnel Boost
How does it work with elmo?
We’re the only fully-managed salary sacrifice scheme for electric cars on subscription. We’ve made the entire salary sacrifice process as quick and simple as possible, so your business avoids admin headaches while your employees take advantage of a high-value benefit.
Use the arrows below to see a step-by-step guide for how salary sacrifice works with elmo.
Employer creates business account
Signs admin agreement
Scheme roll out & employee engagement
Employee quotes & employer approval
Employee signs subscription agreement
Employee signs up for an elmo account
Employee submits driving license and ID
Approval with 24 hours
Delivery date confirmed
Employee enjoys car!
What’s included on elmo?
Employees approved by their employer to take part in the scheme get all the usual benefits of subscribing with elmo, but at a 30-60% discount depending on their salary. There’s no deposit to pay, fast delivery and setup and a convenient all-inclusive package which covers:
- Electric car with 800 miles per months
- Comprehensive insurance cover
- Scheduled maintenance and servicing
- 24/7 roadside assistance
- Vehicle excise duty and congestion charges
- Driver safety telematics
- Fair wear & tear on the tyres
Optional salary sacrifice bolt-ons
As well as our standard package, there are also lots of great bolt-ons, to really put you in the driving seat.
- Additional mileage packages to suit your lifestyle and travelling patterns
- Up to two additional drivers
- A range of charging options, for at home, or using the public network (see below👇)
elmoCharge on salary sacrifice
Fancy saving 30-60% off public charging as well? A first for the industry, you can now add elmoCharge to your salary sacrifice scheme with elmo to achieve the same savings. Simply add it as a bolt-on, with a fixed monthly amount and soak up the savings.
How much does elmo’s salary sacrifice scheme cost?
Our scheme is designed to be a win-win for employers and employees.
Savings for the business
Because employees pay for their electric car subscription via salary sacrifice, the cost of running the scheme for your business is effectively zero. Please contact email@example.com for more details.
Unlike multi-year leases, we also don’t charge your business early termination fees in the event you choose to discontinue the scheme or an employee leaves the business.
Savings for employees
Salary sacrifice is designed to help employees access significant savings (currently 30-60% on electric cars). The cost of the subscription is taken from an employee’s gross salary which dramatically reduces their tax liability and creating the saving.
- Sarah, a marketing executive on £45k could subscribe to a Fiat 500e costing £477pm, but through salary sacrifice, it would only cost her £334pm – a 30% saving.
- Ted, a senior web developer on £80k could subscribe to a Kia e-Niro costing £699pm, but through salary sacrifice, it would only cost him £424pm – a 39% saving.
- Lisa, a CFO on £125k could subscribe to a Tesla Model 3 costing £1,199pm, but through salary sacrifice, it would only cost her £489pm – a 60% saving.
Try our Salary Sacrifice Calculator
Want to know exactly how much you could save with our salary sacrifice scheme? Try out our calculator.
Simply enter your salary and choose the car you are interested in and we’ll show you the estimated monthly savings for both the employer and employee.
What admin is involved?
An electric car salary sacrifice scheme through elmo is designed to be as quick and simple as possible, so we do most of the work for you. To do this, we:
- Carry out all cash flow adjustments and send monthly payroll instructions to you (including NI and VAT savings)
- Provide completed P46 (Car) forms at the start and end of each subscription to be submitted to HMRC
- Provide the P11D form to be submitted to HMRC at the end of each tax year
- Provide the letter that each participating employee must sign confirming their agreement to sacrifice part of their salary in return for the benefit
Ready to get started?
If you’re interested in enrolling your business in the scheme, click the button below to fill out a quick form, and our team will send you an employer and employee manual, explainer deck, and an overview of our salary sacrifice offering.
If you’re an employee and you’re interested in saving 30-60% through salary sacrifice, please share this page with your employer and request an Explainer Deck from firstname.lastname@example.org
Is salary sacrifice worth it for an electric car?
Salary sacrifice for electric cars can be a great opportunity to combine financial advantages with environmental benefits. By making payments directly from pre-tax income, employers can enjoy substantial tax savings on income tax and National Insurance contributions. Electric vehicles currenly have lower Benefit-in-Kind (BIK) tax rates, providing significant tax advantages for company car drivers.
Is it cheaper to get an electric car on salary sacrifice?
Salary sacrifice schemes can be used to finance electric vehicles, making them more affordable for individuals. With the salary sacrifice scheme at elmo, you can save anywhere between 30-60% on the total EV subscription cost.
What are the disadvantages of an EV salary sacrifice scheme?
The potential drawbacks of a salary sacrifice scheme include: reduced take-home pay, lengthy commitment periods, and complex arrangements. A financial advisor can also help you to navigate the associated tax implications. If you opt for an EV on salary sacrifice with elmo, we’ve done all the hard work to make the salary sacrifice process as quick and simple as possible, so businesses can avoid admin headaches while employees take advantage of a high-value benefit.
Does EV salary sacrifice affect pension?
The impact of salary sacrifice schemes on pensions varies. For defined contribution pensions, there is usually no impact as contributions are calculated before salary sacrifice. In defined benefit pensions like TPS or LGPS, the impact can be significant if the salary sacrifice is not government-approved. It’s worth noting however, that regardless of the pension scheme you are enrolled in, the impact of getting a car through salary sacrifice is typically insignificant. The long-term savings you can achieve often outweigh any potential reductions in pension benefits.