Fleets urged to offset NIC hike with EV salary sacrifice

Businesses are being urged to mitigate rising national insurance contribution (NIC) costs by adopting an electric vehicle (EV) salary sacrifice scheme. 

In April, the employer NIC rate rose by 1.2% to 15% and the payment threshold dropped from £9,100 to £5,000 following changes made in the Autumn Budget. 

According to the Institute for Fiscal Studies (IFS), this could cost employers an additional £900 per employee each year, based on a median wage.

Michelle George, commercial director at CBVC, said: “With employer NIC increasing, businesses are under growing pressure to manage rising costs.

“Introducing an EV salary sacrifice scheme is a smart, strategic way to significantly reduce your NIC bill while also boosting employee benefits and delivering on sustainability goals.”

Salary sacrifice works by enabling employees to exchange a portion of their gross salary for a fully maintained electric vehicle.

This lowers the employee’s income tax and NIC liabilities which also translates into lower employer Class 1a NI contributions.

NIC employer savings can be significant

CBVC has calculated employer NIC savings across a range of popular electric vehicles.

Examples are based on a 40-year-old, 40% tax payer with insured vehicles on a 48-month/40,000 mile contract. Quoted 08/04/2025. 

CBVC is seeing strong uptake of its EV salary sacrifice solution across both new and existing customers.

Earlier this year, the scheme was rolled out at Champions (UK)  and now forms a key part of its HR benefits package and environmental, social and governance (ESG) agenda.

Industry data from the British Vehicle Rental and Leasing Association (BVRLA) supports the uptick in salary sacrifice; its April Leasing Outlook Report reported 61% year-on-year growth for the funding method. 

The advice from CBVC comes after research from Venson Automotive Solutions revealed growth in salary sacrifice car schemes is being driven by employees wanting to cut the amount of tax they pay.

It found that almost two-thirds (61%) of drivers who were already in, or would like to join a salary sacrifice (sal/sac) car scheme, say their primary motivation is that it’s a great way of reducing taxable income.