As businesses look for innovative ways to attract and retain talent, boost employee wellbeing, and meet environmental targets, one benefit is quietly rising to the top: the salary sacrifice car scheme.

Offered through providers like Cocoon Vehicles, these schemes allow employees to lease a new car using a portion of their gross salary, while employers enjoy the advantage of delivering a high-value benefit at little to no additional cost to the business. Whether through short-term subscriptions or traditional multi-year contracts, salary sacrifice is proving to be a smart, sustainable solution for modern workplaces.

Here are five reasons why salary sacrifice car schemes are worth considering for both employers and employees.

1. Substantial Employee Savings

Employees who opt into a salary sacrifice scheme can save between 30% and 60% on the cost of leasing a vehicle. These savings come from using pre-tax salary to cover the lease, reducing income tax and National Insurance contributions.

Unlike traditional personal leases, many salary sacrifice car schemes offer a fully inclusive package, typically covering:
- Vehicle lease
- Servicing and maintenance
- Road tax
- Tyres
- Breakdown cover
- Fully comprehensive insurance

This predictable, fixed-cost arrangement makes it much easier for employees to budget and enjoy the benefits of a new car — often an electric or low-emission vehicle — at a fraction of the usual cost.

2. Net Zero Cost to Employers

From the employer’s perspective, the scheme is typically cost-neutral. By facilitating salary deductions via payroll, businesses reduce their National Insurance liabilities, which can help offset any administration costs associated with the scheme.

There’s no need for the company to purchase vehicles, take on asset risk, or manage fleet logistics. For many organisations, it’s a way to offer a high-value perk without impacting the bottom line — especially useful in times of rising business costs.

3. Flexibility for Diverse Workforces

Modern workplaces are increasingly dynamic, with employees on different contracts, working patterns, and locations. A key advantage of the salary sacrifice model is its flexibility.

Some schemes offer traditional two-, three-, or four-year lease terms, while others now include rolling monthly car subscriptions. This adaptability makes the benefit suitable for a broad range of employees — from full-time team members to those on probation or fixed-term contracts.

4. Support for Sustainability and Net Zero Goals

Salary sacrifice schemes typically focus on electric and ultra-low-emission vehicles. Encouraging staff to choose cleaner, greener vehicles not only benefits the environment but also supports an organisation’s corporate sustainability goals.

Switching even a portion of the workforce to electric vehicles (EVs) helps reduce carbon emissions and improve air quality — key outcomes for businesses aiming to align with ESG targets and demonstrate responsible leadership.

5. Recruitment and Retention Benefits

As employers seek to offer more attractive compensation packages, benefits like salary sacrifice schemes are becoming a competitive advantage. They allow companies to stand out in the recruitment market and offer perks that go beyond salary alone.

For current staff, access to an affordable new car — especially an EV — is a meaningful benefit that improves job satisfaction and strengthens retention. It’s particularly appealing to employees who want the freedom of personal car use without the financial burden of ownership or a traditional lease.

Final Thoughts

As both business needs and employee expectations evolve, salary sacrifice car schemes present a rare opportunity: a win-win that delivers cost savings, convenience, and environmental impact all at once.

Whether you’re a business leader looking to enhance your benefits package or an HR professional reviewing staff incentives, now is the time to explore how salary sacrifice could work for your organisation.

To find out more about how the scheme works and what’s involved, visit: https://salarysacrifice.cocoonvehicles.co.uk/