Nearly half of UK employees are calling for the introduction of Salary Sacrifice schemes to access electric vehicles (EVs), according to new research by Volkswagen Financial Services (VWFS) Fleet.
Despite this growing demand, only 32 percent of businesses currently offer this eco-friendly benefit, highlighting a significant gap between employer offerings and employee expectations.
The study, which surveyed 2,000 employed adults across the UK, found that 48 percent of workers would like their employers to provide a Salary Sacrifice car scheme—where employees can allocate a portion of their pre-tax salary toward the cost of a new vehicle.
This tax-efficient scheme is not only popular for its financial benefits but also for its contribution to reducing personal carbon footprints, a key consideration for many workers today.
“Salary Sacrifice schemes offer employees an affordable way to access a brand-new vehicle, with no upfront costs, early termination fees, or hidden expenses,” said Dan Wright, Product Manager at VWFS Fleet. “The scheme also covers additional vehicle costs, such as insurance, maintenance, and breakdown cover, making it a highly attractive benefit with minimal cost to employers.”
Environmental responsibility
As businesses grapple with sustainability goals and the increasing importance of environmental responsibility, the study underscores the potential of Salary Sacrifice schemes to drive both talent attraction and retention. With 79 percent of employees expressing that it is important for their employers to take proactive steps toward sustainability, offering such benefits could become a key differentiator in a competitive job market.
Younger generations, in particular, are leading the charge, with research by Deloitte showing that 55 percent of Gen Z and Millennial workers consider a company’s environmental impact before accepting a job. Moreover, over 40 percent have either changed jobs or plan to do so due to concerns over sustainability.
One-third (33%) of respondents in the VWFS Fleet survey identified Salary Sacrifice as the most attractive eco-friendly workplace benefit, second only to remote working options, which 48 percent favoured. Additionally, 75 percent of employees expressed a desire to reduce the emissions associated with their daily commutes, with 67 percent recognising the role of Salary Sacrifice in providing affordable access to EVs.
“Salary Sacrifice schemes are crucial in encouraging EV adoption through favorable tax incentives,” Wright added. “With the Benefit-in-Kind (BiK) rate for EVs currently set at just 2 percent—and only rising by 1 percent each year until 2028—this is a significant saving compared to the potential BiK rates for petrol or diesel vehicles, which could exceed 30 percent by then.”
As businesses face ongoing challenges in recruiting and retaining top talent, VWFS Fleet’s research highlights the critical opportunity for employers to enhance their benefits packages with sustainable options. “There is a clear demand from employees for eco-friendly benefits, and Salary Sacrifice schemes offer a cost-effective way for businesses to meet this demand while advancing their own sustainability objectives,” Wright concluded.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.
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