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An increasing number of UK employees are taking advantage of employer-provided salary sacrifice schemes to drive an electric car at a significantly reduced cost.
Speaking to Fleet News, Lex Autolease’s Andy Barrell & David Roe, explain why this is especially true for staff at Lloyds Banking Group, which introduced its salary sacrifice (sal/sac) scheme in March 2021.
Since its launch, approximately 3,700 employees have taken delivery of a vehicle through the scheme. This represents around a 9% adoption rate among the 40,000 eligible staff members – making it one of, if not the biggest, private sector schemes active in the UK.
Salary sacrifice has become a major success story in the leasing sector in recent years. By enabling employees to drive a fully insured and maintained car in exchange for a contractual reduction in their gross pay, these schemes provide access to new vehicles at a much lower cost than purchasing privately.
Employers also benefit, as they save on the associated National Insurance Contributions (NICs) for the portion of salary that is sacrificed.
Lex Autolease Customer Relationship Manager, David Roe (pictured right), explained that launching the scheme took approximately 12 weeks. 
He advises that fleets should align the scheme with other business functions, such as payroll, HR, and employee benefits, to maximise its effectiveness.
“It’s essential to eliminate as many manual processes as possible,” Roe emphasises.
Regular and clear communication about the scheme’s benefits is crucial for its smooth operation. Employers should consistently highlight what employees receive for their monthly cost, such as insurance, tyres, and maintenance, and promote the scheme through ongoing workshops and internal communications.
Roe goes on to say, “the key to the success of any scheme is promotion. Lloyds Banking Group employees have regular opportunities to join informative events such as webinars. The Lex Autolease team even hold roadshows at group offices across the country – which allows employees to see, and sometimes drive the cars they might be interested in. Ordering the vehicle can then be done through the online portal. Where schemes aren’t promoted there is a clear correlation with lower adoption rates.”
Currently, 75% of new monthly vehicle orders at Lloyds Banking Group come from renewals, while 25% represent new business. This strong adoption indicates the scheme is well received, and the group anticipates continued high growth throughout the year.
One of the biggest attractions is that employees can access the vehicles available through the salary sacrifice scheme without needing to put down any deposit. They simply order the vehicle and only start paying the monthly rental once it arrives.
As Head of Outsource Relationships at Lex Autolease, Andy Barrell (pictured right) explains: “The scheme not only provides employees with access to a cost-effective, sustainable transport solution but also supports the company’s broader sustainability objectives.”
Lloyds Banking Group aims to halve the carbon emissions generated by its supply chains, as well as the carbon footprints of its investments, by 2030 or sooner. These targets are echoed across the Transport business, which is playing a significant role in the country’s sustainable transport transition, with one of the UK’s largest fleets of electric vehicles
“Why wouldn’t we want to promote that as part of the green agenda?” Barrell says. “We’re really proud of this scheme.”
Offering salary sacrifice as part of a company’s benefits package serves as both a powerful staff retention tool and a compelling incentive for potential employees, setting businesses apart from competitors.
Barrell explains: “Employees at any company ask themselves, ‘Can I get the same package elsewhere, or will it cost me more to leave this business?’”
A key factor that makes the scheme particularly attractive is its robust life events package.
“If your circumstances change for any reason, you can exit the vehicle agreement with minimal hassle,” Barrell adds.
“For fleets considering a salary sacrifice scheme, I’d recommend evaluating the quality of any life events packages offered by suppliers. This ensures that employees aren’t burdened with significant termination costs should their situation change.”
Lloyds Banking Group’s scheme is currently administered through its vehicle leasing brand Lex Autolease, but will eventually transition to salary sacrifice provider Tusker, also part of Lloyds Banking Group’s family of brands.
Beyond offering financial benefits, salary sacrifice can also help organisations reduce emissions from their grey fleet – a challenge the Association of Fleet Professionals (AFP) identifies as a key issue in the coming years.
Click here for more information on salary sacrifice schemes
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