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EV Salary Sacrifice for Academy Trusts: A 2026 Guide
KEY POINTS
- Academy trusts do not need DfE prior approval to run an EV salary sacrifice scheme, provided the scheme presents no cost or liability to the trust - or where any liability has been comprehensively mitigated.
- The latter is the one most trusts will rely on, and it is entirely achievable.
- The test is where does the risk sits if an employee leaves? Everything else follows from that.
Academy trusts can offer electric vehicle salary sacrifice, and in most cases can do so without asking the Department for Education first. The Department's guidance for academy trusts and colleges, sets out one central condition with additional steps a trust should take to meet it.
This guide covers what the guidance requires, how to structure a scheme that satisfies it, and where the residual risk actually sits. It is written for school business leaders and trust finance teams who need to take this to a board or audit committee.
Does a trust need Department for Eduction (DfE) approval?
In most cases, no. The guidance is explicit:
FROM THE DFE GUIDANCE
"DfE prior approval is not required for EVSS schemes that present no cost or liability to the trust or college if an employee does not fulfil their contractual obligations with the scheme provider or where any liability has been comprehensively mitigated. Schemes that do not meet this condition require DfE approval."
Two routes, then. A scheme with no cost or liability to the trust, or a scheme where liability has been comprehensively mitigated. Most trusts will rely on the second, because in practice some residual exposure exists in almost any lease arrangement - the question is whether it has been properly identified and mitigated.
Approval is still required where a scheme does not meet that condition, where the trust is subject to a Notice to Improve, or where the scheme falls outside the standard master hire agreement model.
What the trust must do before launch
The guidance sets out obligations that sit with the trust regardless of provider. A provider can support these, but cannot discharge them for you:
- Follow your own procurement procedures, meeting the requirements of the relevant financial handbook.
- Ensure you have adequate resources to implement and manage the scheme.
- Comply with HMRC requirements for salary sacrifice arrangements.
- Seek legal, HR and audit advice on how the scheme operates.
- Put comprehensive mitigations in place against liability falling on the trust.
- Document your decision-making and your financial risk mitigations clearly - this is what an auditor will ask to see.
- Give employees clear information before they join, and advise them to take independent advice on the tax and pension implications.
The documentation point is the one most often underestimated. The guidance does not simply ask trusts to mitigate risk; it asks them to be able to evidence that they did.
Managing the risks your board will ask about
The DfE guidance lists mitigations that a trust should consider. These are recommendations rather than mandatory conditions, but any proposal to a board that does not address them will invite questions.
This is where our Zero Risk Guarantee steps in. It helps you manage this specific requirement and does exactly what it says on the tin: all risk is mitigated when a lease ends early. This means your trust is complying with the DfE guidance without having to retain any savings for contingency.
If however, your board explicitly requires that you retain a proportion of the National Insurance savings generated by a lease regardless, we can arrange this for you.
We suggest hopping on a call with someone from the loveelectric team to discuss exactly what your trust requires and how we can facilitate your requirements.
Here’s a quick rundown of the DfE’s suggestions:
- Retain a proportion of savings as a contingency. The guidance suggests retaining "a proportion of any National Insurance and employer pension contribution savings resulting from the scheme to provide a fund or insurance to cover the cost or cashflow impact of any leases ending early". However, as outlined above, our Zero Risk Guarantee means there’s no need for a separate contingency.
- Manage the scale of the scheme, including limiting participation and allowing employees to lease no more than one EV.
- Review the scheme annually to confirm the provider continues to offer value.
In regards to limiting staff to only a single EV: this is guidance rather than prohibition, but it is straightforward to configure as you’re setting the scheme up. Your EV salary sacrifice provider should set up the appropriate guard rails for your trust when implementing the scheme, to ensure you remain compliant with UK Government guidance. If a provider cannot cap participation at one vehicle per employee, that is worth knowing before you sign.
How loveelectric measures up to the DfE EV salary sacrifice guidance
The table below sets each requirement against how our scheme is structured to meet it.
What the trust remains responsible for
The DfE expects trusts to document where residual financial risk sits, so it is worth being precise about the two points that apply rather than leaving them to be discovered later.
If an employee leaves and the vehicle cannot be re-hired, an Employee Commitment Fee becomes payable - one month's rental, or three months' if they leave within the first three months of the lease. This is recoverable from the employee, who agrees to it in the signed Driver Handbook and Order Form. Where an early termination fee does arise, our reimbursement is capped at three months' rental, and does not cover excess mileage, damage beyond fair wear and tear, or arrears.
In practice this is precisely what the contingency the DfE asks you to hold is for. Most trusts will never draw on it, because the ReHire service places the vehicle before a fee arises.
Who can take part
The guidance sets expectations for employee eligibility. Employees should:
- Have completed their probationary period
- Be on the PAYE payroll
- Hold a valid UK driving licence
- Not be subject to performance or conduct procedures
- Retain earnings above the national minimum wage after the deduction is applied
The national minimum wage restriction can have a huge impact on scheme uptake. It’s the primary reason we introduced used vehicles. The lower monthly sacrifice brings the scheme within reach of support staff and teaching assistants, not only senior leaders. A scheme that only works for the highest-paid staff is a harder proposition to defend to a board.
Pensions and tax - a signpost
The guidance requires trusts to advise employees to take independent advice on the tax and pension implications of joining. How salary sacrifice interacts with the Teachers' Pension Scheme or the Local Government Pension Scheme depends on your trust's arrangements, and it is a question for your own finance team and pension advisers rather than your car scheme provider. We suggest building that signpost into your employee communications from the start.
What a scheme looks like in practice
For the employee
- They browse available vehicles and can preview the monthly cost before committing
- They choose a car and sign the Driver Handbook, Order Form and a contract amendment
- The agreed amount is sacrificed from gross pay through your normal payroll run
- Servicing, maintenance, breakdown cover and tyres are included in the sacrificed amount
- Insurance is provided by Aviva and included for the period set out in the Driver Order Form*
*loveelectric does not provide or arrange insurance. Insurance cover is offered directly by our insurance partner. Any quotes, applications or policies are handled by the insurer, and we do not advise on, arrange, or receive commission for insurance products. All insurance enquiries and claims must be directed to the insurer.
For the trust
- Sign the scheme agreement
- Run the monthly payroll deduction
- Submit the annual P11D
- Communicate the scheme to staff - uptake builds over time rather than all at once
Everything else - vehicle sourcing, employee queries, lease coordination, early termination handling - sits with the provider. For a multi-site trust without a large central HR function, that division matters more than it does for a single employer.
Case Study: Park Academies Trust
The Park Academies Trust runs an EV salary sacrifice scheme with loveelectric.
“We agreed unanimously that loveelectric were the correct partner for us!”
For a school business leader weighing an unfamiliar arrangement, a trust that has already been through it is worth more than any amount of explanation.
Want to learn how to implement a scheme at your academy trust? Choose a time to talk to one of the loveelectric team now.
A board-ready implementation checklist
- Confirm your scheme meets the no-cost-or-liability test, or document how liability is comprehensively mitigated
- Follow your trust's procurement procedures and record how you did so
- Take legal, HR and audit advice on the arrangement
- Agree the contingency approach with your finance team and size it
- Set participation limits, including one vehicle per employee
- Confirm employee eligibility criteria, including the national minimum wage floor
- Prepare pre-joining information, including the signpost to independent tax and pension advice
- Diarise the annual value-for-money review
Trusts subject to a Notice to Improve, or running a scheme outside the standard master hire agreement model, should seek DfE approval through the Customer Help Portal on the DfE site before proceeding.
Why implementing a scheme soon, matters
The start of any new term is when staff are most receptive to a new benefit. Agree a scheme now, and it can be live and communicated while attention is there.
Plus, being an early adopter gives you an advantage when recruiting staff. A stronger benefits package can be the difference between a candidate accepting your offer and going with a competitor.
Frequently Asked Questions (FAQs)
Q: Do academy trusts need DfE approval for an EV salary sacrifice scheme?
No, provided the scheme presents no cost or liability to the trust if an employee does not meet their obligations, or where any liability has been comprehensively mitigated. Approval is required if the scheme does not meet that condition, if the trust is under a Notice to Improve, or if the scheme sits outside the standard master hire agreement model.
Q: Can teachers get an electric car through salary sacrifice?
Yes, where their trust offers a scheme and they meet the eligibility criteria - completed probation, PAYE payroll, a valid UK driving licence, not subject to performance or conduct procedures, and earnings that remain above the national minimum wage after the deduction.
Q: What happens if an employee leaves before the end of the lease?
The vehicle is re-listed through the EV ReHire Service and the lease transferred to a new hirer, or taken on by loveelectric. An Employee Commitment Fee applies - one month's rental, or three months' if the employee leaves within the first three months - and is recoverable from the employee under the terms they signed.
Q: Can employees have more than one vehicle?
The DfE guidance recommends allowing employees to lease no more than one EV. Your provider should configure the scheme to that limit as part of implementation.
Q: Is there a minimum size for a trust to run a scheme?
No. There is no minimum headcount, and a scheme can run for a small number of participants. What matters is that the arrangement meets the DfE conditions and your trust's own procurement requirements.
Q: How long does it take to set up?
A scheme can be set up in as little as seven days, depending on how quickly funder approval comes through.
Check where your trust stands
Academy trusts can now offer EV salary sacrifice without prior DfE approval, provided liability is properly mitigated and documented. The structure to do that already exists, and trusts are already running it.
We recommend booking a demo with one of the loveelectric team to see if your trust is eligible.
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