What Is a Salary Sacrifice Scheme?

Salary sacrifice schemes are an increasingly popular way for employees to enjoy cost-effective access to benefits while also helping employers attract and retain talent. But what exactly are they, how do they work, and why should they extend to solar and storage solutions? Let’s dive into the details.

1. What Is a Salary Sacrifice Scheme?

A salary sacrifice scheme is an agreement between an employer and employee, where the employee agrees to forgo a portion of their salary in exchange for a non-cash benefit. These schemes can offer tax and National Insurance savings for both the employee and the employer, as the sacrificed salary reduces the employee's taxable income.

2. How Do Salary Sacrifice Schemes Work?

Here’s a simple example:

An employee earns £40,000 per year.

They agree to sacrifice £3,000 of their salary to access a benefit, such as a company car, childcare vouchers, or a bike through a cycle-to-work scheme.

This reduces their taxable salary to £37,000, lowering the amount they pay in tax and National Insurance.

The key advantage is that employees can access goods or services at a lower overall cost compared to buying them outright, thanks to the tax efficiencies.

3. Common Salary Sacrifice Schemes in the UK

In the UK, salary sacrifice schemes are widely used for various benefits, including:

Cycle to Work Schemes: Encouraging employees to purchase bikes and cycling equipment to commute sustainably.
Childcare Vouchers: Helping parents reduce the cost of childcare (though this has been largely replaced by the Tax-Free Childcare scheme).
Pension Contributions: Enabling employees to make tax-efficient contributions to their pension.
Electric Vehicle (EV) Leasing: Offering employees tax-efficient access to electric cars to promote greener commuting.

These schemes are designed to align with national goals, such as improving health, reducing environmental impact, and supporting financial well-being.

4. Why Extend Salary Sacrifice to Solar and Storage?

With the UK’s ambitious net-zero targets and the growing need to address the climate crisis, solar and energy storage solutions should be accessible to everyone—not just those who can afford the upfront costs. A salary sacrifice scheme for solar panels and energy storage would allow employees to:

Lower Energy Bills: Generate and store renewable energy to reduce reliance on expensive grid electricity.
Cut Carbon Emissions: Transition to clean, green energy and contribute to the fight against climate change.
Achieve Energy Independence: Protect against rising energy prices and grid instability.

For employers, offering such a scheme demonstrates a commitment to sustainability, employee well-being, and corporate social responsibility.

5. Why We Need a Salary Sacrifice Scheme for Solar and Storage

At present, salary sacrifice schemes are focused on transport, childcare, and pensions—leaving a gap in solutions that could drive renewable energy adoption at scale. By extending these schemes to include solar panels and battery storage systems, we could make green energy more affordable and accessible to millions of people across the UK.

6. Support a Green Future for All

We believe a salary sacrifice scheme for solar and storage would be a game-changer in the transition to renewable energy. It would empower employees to embrace green technology, reduce their energy costs, and contribute to a sustainable future.

If you share our vision for a greener, more affordable future, join us in calling on the UK Government to introduce a salary sacrifice scheme for solar and storage solutions.

👉 Sign our petition today and help us take one step closer to a clean energy future for everyone.

https://www.saveonwatts.com/salary_form

Let’s work together to save the planet and create a brighter, greener tomorrow.