Does Electric Car Salary Sacrifice Work for a Small Business?

Electric car salary sacrifice schemes are often associated with large employers with hundreds or thousands of staff. But does salary sacrifice actually work for a small business with 20, 30 or 50 employees?

And perhaps more importantly: what is the minimum number of employees needed for an EV salary sacrifice scheme?

The answer may surprise many smaller employers. There is no statutory minimum workforce size for salary sacrifice. A scheme can potentially be worthwhile for a relatively small company – and with NEV Leasing, it may be possible even where only one employee initially wants a car.

How many employees do you need for a salary sacrifice car scheme?

There isn't an HMRC rule saying that an employer needs 20, 50 or 100 employees before it can introduce salary sacrifice.

Salary sacrifice is essentially an agreement between employer and employee under which the employee gives up part of their cash salary in return for a non-cash benefit. HMRC says this requires a change to the employee's contractual terms, which the employee must agree to. (

So, for a smaller business, the more useful question isn't "Are we big enough?"

It is:

"Do we have enough employees who could benefit to make offering a scheme worthwhile?"

For some businesses, that could initially be just one or two people.

What about a company with 20, 30 or 50 employees?

This is arguably where salary sacrifice becomes particularly interesting.

A company with 30 employees doesn't need 30 people to take an electric car. It might launch a scheme and initially have three employees interested.

The business can then assess the scheme on the benefits it provides rather than simply the number of vehicles.

For a smaller employer, those benefits can include recruitment and staff retention. Losing an important employee can have a disproportionately large effect on a 30-person company compared with an organisation employing thousands.

Being able to offer an attractive EV salary sacrifice scheme alongside pension and other employee benefits can therefore help a smaller company strengthen its overall employment package.

How much does an employee need to earn?

This is another important question for smaller businesses.

There isn't a universal minimum salary such as £30,000 for joining an electric car salary sacrifice scheme.

The important restriction is that the salary sacrifice cannot reduce an employee's cash earnings below the National Minimum Wage. HMRC requires employers to put procedures in place to ensure this doesn't happen.

From April 2026, the National Living Wage for employees aged 21 and over is £12.71 per hour.

Whether someone earning £30,000 can participate will therefore depend on factors including their working hours, the amount being sacrificed and the cost of the vehicle.

This is one reason why smaller employers shouldn't dismiss salary sacrifice simply because some employees earn less than others. Eligibility can be assessed individually.

Why are electric cars particularly suitable for salary sacrifice?

The tax treatment remains attractive.

For the 2026/27 tax year, a zero-emission company car has a Benefit-in-Kind percentage of just 4%.

Salary sacrifice reduces contractual cash salary, potentially reducing the Income Tax and National Insurance associated with that salary, although the employee pays company car tax on the EV provided.

There can be an employer benefit too. The main employer National Insurance rate for 2026/27 is 15%, although Class 1A National Insurance applies to taxable benefits, so the actual employer saving needs to be calculated rather than simply assuming the full 15% is retained.

What if employees already receive a car allowance?

This is particularly worth reviewing.

A smaller business may already pay certain employees additional cash to fund their own cars. Introducing an EV salary sacrifice arrangement could provide another option for eligible employees.

However, existing car allowances, employment contracts, business mileage requirements and any changes to remuneration should all be considered before changing the arrangement.

NEV Leasing can help an employer look at the existing situation and establish whether salary sacrifice is a practical alternative.

Is the administration worth it for a small company?

This is probably the biggest concern.

A business employing 25 people doesn't necessarily have a large HR department. The Finance Director, Office Manager or business owner may already be handling several roles.

Consequently, a salary sacrifice scheme designed for a multinational organisation may be unnecessarily complicated.

For a smaller company, the objective should be to keep the scheme simple, controlled and proportionate to the number of employees likely to use it.

Employers also need to think about what happens if somebody leaves, goes on long-term absence or experiences another lifestyle change during the vehicle agreement. These risks can matter even more to a smaller business, so they need to be considered when the scheme is designed.

Could salary sacrifice support your environmental objectives?

Potentially, yes.

Encouraging employees to move from petrol or diesel cars into EVs can form part of a company's wider environmental strategy. Depending on how the organisation measures and reports its emissions, employee vehicles and commuting may also be relevant to its Scope 3 objectives.

For a small business trying to demonstrate a credible commitment to reducing its environmental impact, an EV salary sacrifice scheme can therefore have benefits beyond simply providing cars.

So, what is the smallest company that can offer EV salary sacrifice?

Potentially, a very small one.

There is no requirement to employ hundreds of people and no statutory minimum number of employees who must take a vehicle.

The real test is whether the scheme makes sense for the particular business and its employees.

A company with 20 employees and two people wanting electric cars could have a stronger reason to investigate salary sacrifice than a company employing 200 people where nobody is interested.