Most employees choose their first new car through salary sacrifice

New analysis from salary sacrifice specialist Fleet Evolution has revealed that the vast majority of employees joining its car schemes are getting behind the wheel of their first ever new car — and most are not high earners.

According to the Tamworth-based company, 82% of participants in its salary sacrifice car schemes had never previously owned a new vehicle. Notably, the majority were basic-rate taxpayers (20%), challenging the perception that such schemes only benefit higher earners.

In addition, an overwhelming 98% of scheme participants chose electric cars, with just 2% opting for hybrids. Fleet Evolution says this highlights how salary sacrifice is proving a powerful tool in accelerating the shift to green mobility.

“There is this misconception that salary sacrifice car schemes only work for very well-paid employees. But that is not the reality,” said Andrew Leech, founder and managing director of Fleet Evolution.

“Salary sacrifice has made a new car affordable for many lower paid employees, and in many cases, for the first time.”

Leech attributed the popularity of electric vehicles (EVs) to low Benefit-in-Kind (BIK) tax rates, currently at 3%, rising slightly to 4% in 2026/27, as well as the increasing availability of affordable EV models.

Fleet Evolution highlighted the MG4 as the most popular choice for first-time electric car drivers, citing its high specification and genuine 200+ mile range as key factors.

The company also welcomed the Government’s recently announced Electric Car Grant (ECG) of up to £3,750, which Leech said would cut the cost of EVs by around £50 per month. However, he noted that a lack of clarity around which models are eligible remains a challenge.

Employees earning as little as £32,000 can afford an EV through salary sacrifice under current rules, which prevent schemes from reducing take-home pay below the minimum living wage. But Fleet Evolution is lobbying for a policy change to allow voluntary exemptions for those wishing to opt in despite earning below the threshold.

“We would like Government to make a minor adjustment to the current rules with a caveat which states that the minimum living wage threshold remains in force, unless the employee opts for and agrees to a beneficial salary sacrifice arrangement which takes them below that level. That would open up electric car ownership to even more prospective employees.”