Department for Education’s EV Salary Sacrifice Guidance for Multi-Academy Trusts and Further Education Institutions: What You Need to Know

What the DfE’s EV salary sacrifice guidance could mean for Multi-Academy Trusts (MATs) and further education (FE) institutions

For Multi-Academy Trusts (MATs) and further education (FE) institutions, the Department for Education’s (DfE’s) recent guidance on electric vehicle salary sacrifice schemes is welcome news. It gives academy trusts, colleges and other covered education bodies more clarity on how they can offer employees access to electric cars through salary sacrifice, as long as the scheme is well structured, financially controlled and aligned with the relevant financial handbook. In other words, this is now something MATs and FE institutions can explore with more confidence, provided the right safeguards are in place. That’s where working with an experienced provider, like Tusker, can really help.

From uncertainty to a clearer way forward

The DfE guidance, published in July 2026, sets out how publicly funded education bodies should think about electric vehicle salary sacrifice schemes. The important bit is this: prior DfE approval isn’t needed where the scheme won’t create a cost or liability for the trust or institution if an employee doesn’t meet their contractual obligations. The same applies where any potential liability has been properly mitigated.

That’s a helpful shift. Instead of asking, “Are we allowed to offer this benefit?”, MATs and FE institutions can now focus on the more practical question: “How do we do this responsibly?” For MAT and FE leaders, CFOs, HR teams, governors and trustees, that means looking closely at governance, procurement, payroll and risk before making a decision.

Why this matters for MATs and FE institutions

MATs and FE institutions are under pressure from every angle: attracting and keeping great people, managing tight budgets, showing value for money and making progress on sustainability. An EV salary sacrifice scheme can help with several of those challenges at once. It can give employees a more affordable way to access a lower-emission car, while helping the organisation support its environmental goals without increasing salary budgets.

But, of course, it’s not just about offering a popular benefit. Publicly funded education bodies are accountable for public money, so any scheme needs to be backed by clear decision-making, proper due diligence and a really good understanding of who is responsible for what – the trust or institution, the provider and the employee.

The governance test: making sure risk is under control

The key theme in the DfE guidance is financial risk. MATs and FE institutions need to be comfortable that a scheme won’t leave them with unexpected costs if an employee leaves, stops taking part or doesn’t meet the terms of the agreement. That means thinking through things like early termination charges, resignation, redundancy, long-term sickness, parental leave, damage, excess mileage and poor maintenance.

A useful way to look at it is this: it’s less about whether the scheme sounds attractive, and more about where the risk sits. A well-designed scheme should make that clear from the start, in the contracts, the employee information and the provider’s responsibilities. If the organisation is relying on mitigations, those mitigations need to be clear, comprehensive and easy to evidence if auditors, governors or trustees ask to see them.

What MATs and FE institutions should think about before getting started

The guidance is clear that organisations still need to do their own due diligence. Before introducing a scheme, a MAT or FE institution should follow its procurement procedures, comply with the relevant financial handbook and HMRC requirements, and take appropriate legal, HR and audit advice. It’s also worth documenting the decision properly, including why the provider was chosen and what steps have been taken to reduce or remove financial exposure.

This doesn’t need to feel like a box-ticking exercise. Done well, it gives everyone confidence that the scheme is right for the organisation and has been thought through properly. For larger MATs or multi-site FE institutions, it can also be helpful to set one clear approach across all schools, colleges or campuses, so employees get a consistent experience wherever they work.

Keep employee communications clear and balanced

For employees, the appeal is easy to understand. The cost of the car comes out of gross salary, which can reduce income tax and National Insurance contributions. But it’s important that people understand the full picture before they join. Salary sacrifice can affect pensionable pay and other salary-related entitlements, and employees must stay above National Minimum Wage after the reduction.

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Employees need clear, plain-English information about how the scheme works, who can take part, what they’re responsible for and what happens if their circumstances change. The aim is to help people make an informed choice, not push them into a decision.

A useful benefit, if it’s done properly

For MATs and FE institutions that approach the guidance carefully, there’s a real opportunity here. EV salary sacrifice can sit neatly alongside a modern employee benefits package, while also supporting sustainability goals. But it works best when finance, HR, payroll, procurement and governance are all part of the conversation.

The message from the DfE guidance is clear: MATs and FE institutions now have a more practical route to explore EV salary sacrifice schemes, but they still need to put the right checks and controls around them. By taking a thoughtful, well-governed approach, education organisations can give employees more choice, support greener travel and protect the organisation at the same time.

As part of Lloyds Banking Group, Tusker works closely with Phil Herriott and the Group’s dedicated Education Banking Team to support Academy Trusts and Further Education institutions. Together, we help education leaders address a range of strategic challenges, from financial resilience and long-term sustainability to attracting and retaining talented staff. For organisations considering an electric vehicle salary sacrifice scheme, the DfE’s guidance provides a clearer framework for exploring these opportunities with confidence, supported by appropriate governance, due diligence and risk management.