Demand for electric car salary sacrifice has spiked ahead of April’s increase to employer National Insurance contributions, a leading provider has reported.

In the two months post-Budget, sal-sac inquiries were up 21% and there was a 34% increase in sign-ups

The Electric Car Scheme said it’s seen a big jump in businesses signing up since the Government’s Autumn budget announcement.

EV salary sacrifice schemes allow employees to pay for EV leases from their pre-tax salaries, before any income tax or national insurance contribution is applied, bringing down the cost of leasing an EV by 20-50%. As long as that vehicle emits no more than 75g/km CO2, BiK and NICs are based on its taxable value instead of the much pricier monthly rental cost. Businesses also benefit by reducing their overall employer National Insurance contributions.

However, as announced in the Autumn Budget 2024, employer NICs will rise from 13.8% to 15.0% from April 2025, while the income threshold will be reduced from £9,100 to £5,000 per year. The rate change also applies to Class 1A rates for providing workplace benefits – such as a company car.

Since the end of October 2024 and the announcement of the increase to employer National Insurance contributions, the Electric Car Scheme says inquiries from businesses looking to implement the scheme have increased 21%. Also, the number of companies actually signing up has increased 34% before the April NI changes.

Employees are also taking up the scheme, with car orders up 22% since the Autumn Budget announcement. This has coincided with the growing availability and popularity of second-hand EVs, which make electric vehicles more financially accessible. Currently nearly half of all car orders from the Electric Car Scheme are for second-hand EVs.

Data from the Electric Car Scheme also shows interest in its scheme has grown 160% year on year – driven by the increase in popularity of EVs, combined with the cost-of-living crisis making household budget tighter.

Thom Groot, CEO and co-founder of the Electric Car Scheme, believes that this increase is due to businesses taking advantage of the scheme to provide new and second-hand EVs to their staff while also decreasing their employer national insurance contribution.

He said: “It’s good to see that this has translated into an increase in car orders, as employees take advantage of the considerable savings available through the scheme. We started the Electric Car Scheme to make EVs more affordable and help increase uptake ahead of the phase-out of traditional cars. It is also the reason that our second-hand EV proposition has been so popular, and it now makes up nearly half of our sales.”

The salary sacrifice firm also says its research shows employees are increasingly expecting this kind of benefit from their employers; analysis reveals 30% of employees now expect help from their employers to commute sustainably, up from 10% in 2023.