Salary Sacrifice vs Affinity Schemes Navigating Change

Andrew Smith
Apr 9
3 min read

Navigating the Evolving Landscape of Salary Sacrifice Schemes:

How VPS Affinity Programs Provide the Solution

The automotive industry is facing significant change, particularly in salary sacrifice schemes. The introduction of the Euro 6e-bis emission standard, effective from January 2025, will result in higher reported CO₂ emissions for plug-in hybrid electric vehicles (PHEVs), potentially pushing them above the 75g/km CO₂ threshold required for salary sacrifice eligibility. According to Fleet News, 80% of respondents believe these changes could signal the end of PHEVs as company cars, especially when combined with the planned hike in Benefit in Kind (BIK) rates (source: Fleet News). As this shift unfolds, affinity schemes powered by VPS provide a vital solution for manufacturers.

Why PHEVs Are Becoming Unsuitable for Salary Sacrifice

Salary sacrifice schemes have traditionally allowed employees to lease vehicles using pre-tax income, provided the vehicle emits 75g/km of CO₂ or less. However, the new emissions testing under Euro 6e-bis is expected to increase reported CO₂ values for many PHEVs — in some cases, more than doubling or tripling them.

For example, a PHEV currently rated at 30g/km could see its CO₂ value increase to 90g/km under the new testing, pushing it well above the 75g/km limit. If this happens, those vehicles will no longer qualify for the tax advantages associated with salary sacrifice. This shift means that, going forward, pure EVs will be the primary eligible option for salary sacrifice.

The Growing Importance of Affinity Schemes

While the shift toward EVs supports sustainability goals, not all employees are ready or able to switch to an EV due to factors like charging infrastructure, driving range, or personal preference. This is where affinity schemes become critical.

What Is an Affinity Scheme?

Affinity schemes allow manufacturers to offer exclusive discounts on new vehicles to defined groups, such as employees of large corporations and public sector workers. Unlike salary sacrifice schemes, affinity programs are not restricted by CO₂ emissions thresholds — meaning manufacturers can offer a full range of models, including:

Pure EVs – Ideal for meeting sustainability targets
PHEVs – Even if they are no longer eligible for salary sacrifice
Hybrids and petrol models – To ensure customer choice and balance sales across different powertrains

Affinity schemes allow manufacturers to target specific, high-intent buyers, driving increased conversion rates and fostering long-term brand loyalty.

How VPS Affinity Programs Provide the Solution

VPS offers a fully managed affinity solution designed to maximise sales, improve customer experience, and reduce operational complexity for manufacturers.

1. A Fully Branded, Manufacturer-Specific Platform

VPS creates a custom-branded affinity platform for each manufacturer, providing a seamless experience for employees of your selected organisations. Key features include:

Secure login and customer verification to protect scheme integrity
Dynamic configurator for model selection across all powertrains
Virtual showroom to store and compare quotes
Live pricing, finance, and lead management integrated with dealer networks

2. Flexible & Controlled Vehicle Discounts

Unlike salary sacrifice, where eligibility is dictated by emissions rules, VPS affinity schemes give manufacturers full control over offers and pricing. Manufacturers can:

Promote EVs, PHEVs, hybrids, and petrol models through a single platform
Adjust offers in real time based on stock levels and market conditions
Ensure only eligible customers can access discounts, preserving scheme value

3. Fully Managed Marketing and Dealer/Customer Support

VPS provides:

Targeted marketing techniques to raise awareness and drive sales
Ongoing digital communications to engage employees
End-to-end lead management, connecting buyers with dealers
Full customer and dealer support from enquiry to delivery

4. No Upfront Costs – Performance-Based Success

VPS operates on a performance-based model — manufacturers only pay when the scheme delivers results. With a proven track record of delivering up to 10% incremental sales growth, affinity programs provide a scalable and profitable sales channel with minimal risk.

Why Now Is the Time to Act

With emissions regulations making PHEVs increasingly unsuitable for salary sacrifice, manufacturers need to adapt their strategies to grow market share. Affinity schemes provide the ideal solution, ensuring manufacturers can continue offering a full range of models — including EVs — while expanding their reach and increasing sales.

By partnering with VPS, manufacturers can secure a strategic, high-margin sales channel that complements existing retail and fleet strategies. Now is the time to future-proof your sales model and unlock new growth opportunities through affinity.

References:

1. Fleet News - Do new emissions tests and a planned hike in BIK, spell the end for PHEVs as company cars? (Fleet News, March 2025)

2. Fleet News - Salary sacrifice threshold warning from emissions testing change (Gareth Robers, March 2025)