Electric cars are being offered in some UK companies as a perk to attract young and environmentally aware employees.
The idea is that an employee is signed up in a salary sacrifice scheme to allow them to lease an electric car through the company.
According to Octopus EV's latest sustainable workforce report, more and more Gen Z and millennial employees are choosing to work for companies with similar environmental, social and governance (ESG) values as them. In several cases, a company's green values and benefits can be the deciding factor in whether or not a job applicant takes the offer.
Green benefits include electric vehicle (EV) salary sacrifice schemes, cycle-to-work schemes, low carbon holiday options and volunteering at environmental charities.
Green transport benefits are becoming increasingly more popular, with the report highlighting that 62% of 25-34 year olds and 56% of 35-44 year olds would be interested in them, if their employer offered such a benefit.
And 61% of employees also said that they would consider choosing an electric vehicle for their next car, although, for almost 78% of employees, they remain beyond the price of the average worker.
Some 74% of employees would still want a company EV salary sacrifice scheme if it were possible, according to Octopus EV. This is especially the case when the scheme is transparent, clearly communicating all that would be included, such as free miles, servicing, a free home charger, repairs, maintenance, insurance and so on.
Benefits of an EV salary-sacrifice scheme
The EV salary-sacrifice scheme basically means that employees accept a cut on their pre-tax and national insurance salaries, in order to pay leasing expenses for an electric vehicle. Through this, employees also decrease their taxable salary, thus making a saving on both national insurance and income tax.
One of the biggest benefits of an EV salary-sacrifice scheme is that it gives employees greater access to the use of electric vehicles, while cutting the high price of privately owning one.
According to personal finance research company NimbleFins, the average price of an EV in the UK is £48,000 (€56,002.37).
That means electric vehicles are mostly out of reach for many UK employees.
A salary-sacrifice scheme would give employees the chance to test out the use of EVs, and maybe eventually deciding to buy one of their own.
The benefit-in-kind charge, or the company car tax, for diesel or petrol vehicles is as high as 37% in the UK. In contrast, for electric vehicles, the government has imposed a BIK of just 2%.
Although the BIK will be raised to 3% in April 2025, with an additional percentage point added every year to 2028, the price differential between BIK tax for petrol and diesel cars versus electric models remains wide.
Other green benefits on offer?
Another green benefit on offer from employers is the the cycle-to-work scheme. This is similar to the EV salary sacrifice scheme, where employers buy cycles and employees can pay them back over a period of time. In the UK, cycle-to-work schemes are especially popular in cities such Cambridge, York and Kingston upon Hull.
Green pensions are now on offer, too. This is where employees can choose to invest their pension funds in companies which address environmental and social causes. Low carbon holiday travel perks are also becoming increasingly more popular. This involves offering employees getting a few more days off for holidays, so they can travel using lower carbon options, such as trains, rather than planes.
Strictly speaking, flexible working does not come under the green benefit umbrella. However, it is increasingly also being included as an environmentally conscious benefit for employees, as a way of reducing the carbon footprint incurred on their commutes.
Employee volunteer days in environmental charities are also on the rise, where employers offer workers the chance to donate their time to causes that matter to them.
