EV Salary Sacrifice Eligibility: Who Can Join? (HR Guide)

EV salary sacrifice isn’t just for senior managers – and the assumption that it is might be costing your employees to miss out on one of the UK’s most valuable workplace benefits. 

In general, employees paid via PAYE can join an EV salary sacrifice scheme. The only stipulation is that the cost of the lease mustn’t take them below the National Living Wage. Companies are able to select a custom salary threshold if they wish, too. Younger employees and those under 25 may not make the same tax savings as higher earners, but the benefits of salary sacrifice schemes are proportionally more valuable. 

Our goal at loveelectric by Perkbox is to make salary sacrifice schemes as accessible as possible. This article gives HR teams and employees a definitive guide to who qualifies, who is likely to benefit most, and what to consider for part-time employees and new starters.

The Core Eligibility Criteria

In practice, eligibility focuses less on job title and more on payroll structure, salary after sacrifice, and the employer’s scheme rules. Eligibility depends on four main factors:

• PAYE employment 
• Salary after sacrifice
• Employer policy
• Leasing provider criteria

Most employees qualify for salary sacrifice, so long as they are paid through PAYE and their salary remains above the National Minimum Wage. It’s important to know that there are nuances for all of these employee types:

• Permanent employees: The most commonly eligible group for EV salary sacrifice scheme if they are paid through PAYE and if their salary remains above NMW. Eligibility will be subject to the employer’s scheme rules and the leasing provider’s underwriting criteria.
• Part-time employees: Eligibility depends on their hours as salary sacrifice cannot reduce pay below the NMW, so some lower-paid or reduced-hours employees may not be able to sacrifice enough salary for their preferred vehicle.
• Fixed-term employees: May be eligible, but it depends on the provider. Leasing providers often require sufficient remaining contract length or other evidence of employment continuity. 
• New starters: Depends on the employer’s policy; some only allow new employees to join after they’ve completed a probation period to reduce risk.
• Zero-hours employees: Eligibility is complicated as it depends on their earnings, PAYE status, and the provider’s underwriting approach, because income can fluctuate from pay period to pay period.
• Company directors: Eligible if they receive their income through PAYE rather than dividends. Must satisfy the same salary and affordability requirements as other employees.

What About the National Living Wage?

Employees aged 21 and over must remain above the National Living Wage, while younger employees must remain above the relevant National Minimum Wage rate for their age. You’ll often see these terms used interchangeably, although the National Living Wage is higher than the National Minimum Wage.

The salary sacrifice amount simply has to leave the employee’s pay above this legal minimum. Our eligibility checker is the easiest way to determine whether an employee will qualify for the scheme. 

Part-Time and Flexible Workers

Part-time workers can also participate in salary sacrifice schemes, and they’ll face the same eligibility requirements as their full-time counterparts. Many flexible workers will still qualify for these schemes, depending on their hourly rate and contracted hours. 

Their take-home pay after sacrifice needs to remain above the NMW, and they’ll need to meet both the employer and provider’s requirements.

New Starters and Probationary Periods

Many employers choose to introduce a waiting period – often aligned with completion of probation – before employees can join. This probationary period reduces risk and ensures employment continuity. Your newest employees will have something to look forward to after their probation – a brand-new EV on their payslip.

Probationary periods are a company policy, rather than an HMRC rule. Although some schemes may not offer their full early termination support for employees who haven’t passed probation. Even if you don’t have any new starters, we recommend updating your HR policy before implementing your salary sacrifice scheme to include policies for probationary periods with a determined timeline. 

Why Lower Earners and Younger Drivers Can Benefit Most

It’s easy to assume that lower earners and younger drivers aren’t eligible for salary sacrifice schemes or that they won’t benefit in the same way as higher earners. However, there are 3 main benefits for them:

‍
The tax saving is proportional, but the fixed costs aren't 

Salary sacrifice isn’t only about tax efficiency. With an EV salary sacrifice scheme, a lower earner gets their insurance, maintenance, breakdown cover, and a new EV with one monthly payment. 

This package often saves younger drivers more relative to their income than a senior manager. For employees on tighter budgets, bundling services, insurance, and maintenance into one monthly payment can make budgeting simpler and more predictable. 

Younger drivers often face higher insurance costs, which are more manageable through these schemes. The bundled package of an EV salary sacrifice scheme represents proportionally greater value for lower earners as a result.

No credit check for employees

Traditional car finance is dependent on an individual's credit history. Unlike a personal PCP or lease, employees usually do not need to apply for consumer car finance themselves. Instead, eligibility is based primarily on their employer’s scheme and leasing provider requirements. 

Many younger employees often struggle with paying deposits on personal leases or having finance approved. Salary sacrifice removes many of these traditional barriers by using their salary to determine eligibility. It can make EV driving accessible to employees who may otherwise struggle to finance a new vehicle. 

Who Typically Cannot Join

There are a few situations where people typically won’t be eligible to join a salary sacrifice scheme. Self-employed people and freelancers don’t qualify as they aren’t paid by PAYE. Contractors paid via invoices, and sole traders are also not eligible.

Similarly, international employees who aren’t paid through a UK PAYE system won’t be eligible either. Additionally, very senior members of staff paid via dividends do not qualify either. Employees who are already at the national minimum wage threshold won’t be able to join. Many employees can still discuss alternatives to explore other employee benefits.

loveelectric's Inclusive Approach

At loveelectric, we have no minimum headcount requirement and work with businesses of all shapes and sizes. As part of Perkbox, we follow their benefits-for-everyone philosophy. 

EV salary sacrifice schemes are available to SMEs as well as large organisations, and loveelectric offers support beyond launch day, from marketing toolkits to onboarding support. If you’re considering signing up, read our guide for how salary sacrifice works when you have under 50 employees.

Take the First Step and Use Our Eligibility Checker 

If an employee is paid via PAYE and earns above National Minimum Wage, they should be considered for a salary sacrifice scheme. The majority of employees are eligible, and it’s wrong to assume that it’s only for senior management. Always assess each employee’s eligibility before making assumptions.

Whether you’re introducing a new scheme or answering employee questions, loveelectric can help you assess eligibility, understand NMW considerations, and make EV salary sacrifice available to as many employees as possible.

Use our eligibility checker and explore real salary sacrifice savings to learn how your employees – from recent graduates to senior management – can benefit.