Company car vs salary sacrifice: Which is the best choice for your employees and business?

TL;DR

• Choosing between a company car vs salary sacrifice depends on cost, admin, and sustainability goals.

• Salary sacrifice schemes for electric or hybrid cars often save employees tax and NI while reducing employer NICs.

• Company cars mean higher admin and costs, while salary sacrifice is typically cost-neutral and greener.

• For most businesses, salary sacrifice offers a modern, eco-friendly, and engagement-boosting alternative to traditional company cars.

Is a gleaming company car still the ultimate perk, or is there a smarter, greener way? As an employer, you want benefits that make your people feel seen, supported, and excited. But with budget, admin, and sustainability in play, the old company-car model might feel more like a drag than a drive.

Enter salary sacrifice for green cars, a twist on the traditional company car that’s financially savvy, eco-friendly, and engagement-boosting. This blog’s here to help you compare company car vs salary sacrifice, giving you the facts, the numbers, and the feel-good angle employers crave. And if you’re looking to make it easy? Extras’ Green Car Benefit has got your back, with no per-user fees and full admin support.

 What is a salary sacrifice car scheme?

Let’s keep it simple: your employee swaps a chunk of their gross salary for a brand-new electric or hybrid car. That means less tax and National Insurance to pay for them, and fewer employer NICs for you, too. Want to know more? What is a salary sacrifice?

Rather than footing the bill for leasing, maintenance, and insurance, Extras’ Green Car Benefit wraps all that into one monthly payment. In a nutshell, it’s easy for everyone. The employee chooses their car. You approve the request. Their salary adjusts. Their car turns up. Done.

Salary sacrifice car scheme examples

Salary sacrifice car schemes are an increasingly popular employee benefit that allows staff to drive a brand-new electric or hybrid car for a fixed monthly cost taken directly from their salary. One leading example is the Green Car Benefit, administered by Tusker. It provides employees with a fully inclusive package covering the car, insurance, road tax, servicing, MOT, breakdown cover, and even replacement tyres. Because the payments are deducted before Income Tax and National Insurance, employees save money while accessing the latest ultra-low emission vehicles from brands like Tesla, Nissan, Audi, and Hyundai.

For employers, schemes like this are cost-neutral or even cost-positive, with potential Class 1 National Insurance savings. They’re easy to implement, fully managed by providers, and help businesses meet green and Corporate Social Responsibility (CSR) goals. Most importantly, these schemes are a highly tangible perk, helping attract, engage, and retain talent while promoting sustainable travel choices for the workforce.

Electric car salary sacrifice example

An electric car salary sacrifice scheme lets employees lease a fully electric vehicle without paying a deposit or worrying about depreciation. Take the Green Car Benefit as an example. An employee simply logs into their BHN Extras account, chooses their preferred electric car, whether it’s a Tesla Model 3, Hyundai Ioniq, or Audi e-tron, and submits a request. Once approved, the employer arranges the salary deductions, which reduce the employee’s gross pay and unlock savings on Income Tax and National Insurance.

The employee then receives their car with everything included: comprehensive insurance, MOT, servicing, breakdown cover, and even replacement tyres. The only thing left is to charge up and drive. Employers also benefit, as the scheme supports sustainability goals and demonstrates a commitment to greener, more affordable travel options. It’s an effortless way to make eco-friendly driving accessible, while improving employee wellbeing and retention at the same time.

Company car vs salary sacrifice: Head-to-head

Financial impact

Company car

• You handle the lease, insurance, servicing and admin.

• You pay company NICs on the Benefit in Kind (BIK) value..

• You face depreciation and potential disposal fees.

Salary sacrifice

• Employer’s admin-free, cost-neutral through Extras.

• You save NICs on the salary diverted.

• Even employees save on tax and NI.

Environmental impact

The carbon footprint of electric cars is 50 to 80% better than petrol cars. If you sign up via Extras, you’re promoting active green choices (EVs, cycles) without weakening your bottom line.

Employee engagement & culture

With traditional company cars, younger staff often feel tied to old-school benefits. EV schemes? They’re aspirational and modern. By offering greener, smarter choices, businesses can boost engagement and retention, showing they’re forward-thinking and aligned with what employees value today. That level of connection is gold.

How does salary sacrifice work for a car?

The process is deceptively simple:

• Employer signs up to Extras (for free).

• Employee picks a car model and calculates quotes.

• Employer approves and payroll adjusts gross salary.

• Tuskers delivers the car with full servicing and insurance.

• Employee drives. Extras handles portal, reporting, and support.

You skip the hassle of disposing of vehicles or dealing with insurance. Extras and Tuskers manage it all.

Why salary sacrifice should outshine the company car

Still on the fence? Let’s answer the big questions:

• Budget squeeze: Who wants higher admin costs when salary sacrifice costs you zero?

• Sustainability: Petrol cars signal inefficiency; Electric Vehicles send the right message.

• Employee happiness: Real-world savings + green cred = more engaged workforce.

• Simpler admin: No lease renewal, disposal, car asset management.

More than a third of UK employees said they will choose an electric car for their next vehicle, and 62% plan to get their vehicle through a salary sacrifice scheme. Those stats speak volumes.

Why Extras is the smart choice

• Completely free: There’s no setup fee or per-user fee.

• Seamless admin: Dashboards, payroll tools, benefit in kind tax reporting, all done.

• Built for all sizes: Small team? No problem. Enterprise? Equally smooth.

• Sustainability locked-in: Green Car Benefit aligns with ESG goals.

• Support when you need it: Guides, webinars, and demos are all available.

Head over to Extras’ Green Car Benefit page to get full details, or jump straight in and request a demo now.

Ready to make sustainable travel a seamless employee perk?

When it comes to company car vs salary sacrifice, the salary sacrifice model is hard to beat. It’s financially smart, environmentally savvy and employee-friendly. Extras’ Green Car Benefit smooths every bump in the road, manages the admin, and puts you and your team in the driver’s seat.

If you’re eager to future-proof your benefits and give your team something that’s practical, planet-positive and actually affordable, then a green salary sacrifice car via Extras could be your next big move. To see how Extras can help you roll out an EV salary sacrifice scheme without the hassle:

• Learn more on the Green Car Benefit page.

• Or request a demo to see it in action.

Let’s drive into a smarter, greener workplace together.