Salary Sacrifice Electric Car Calculator

You agree to receive a lower salary in exchange for your employer providing an electric car. The car lease cost comes from your pre-tax salary, saving income tax and National Insurance.

At the 40% tax rate with NI, you save up to 42% of the lease cost. At the 20% rate with NI, you save up to 28%. The 2% BiK rate on EVs makes the net saving substantial.

The BiK rate for fully electric cars is 2% in 2025/26. It rises to 3% in 2026/27 and 4% in 2027/28. This compares to 28-37% for petrol and diesel cars.

Most salary sacrifice schemes offer manufacturer-approved cars via fleet leasing. You choose from an approved list. Some schemes allow any car with an agreed leasing partner.

Your employer arranges the lease — not you personally. Your credit history is generally not checked. However, employers may have salary thresholds (e.g., post-sacrifice salary must not fall below minimum wage).

Employers choose whether to offer the scheme. Most large employers now do. SMEs are increasingly offering it. HMRC rules allow all employees to participate if the scheme is properly structured.

If you leave, you typically either: take over the lease personally, return the car (termination charges may apply), or have the remaining payments deducted from final salary. Check your scheme terms.

Salary sacrifice reduces your gross salary which lenders may use for affordability calculations. Some lenders add the sacrifice back; others use the reduced salary. Discuss with your mortgage broker.

Salary sacrifice requires an employer relationship. Self-employed sole traders cannot use it. Limited company directors can offer the scheme through their company.

This depends on whether your pension is based on pensionable pay. If salary sacrifice reduces pensionable pay, your pension contributions and employer contributions may be slightly lower.

Salary sacrifice is cheaper because lease payments come from pre-tax salary. A personal lease is paid from net income. The gross equivalent cost is significantly higher for personal leases.

Yes. Scottish taxpayers at the 42% higher rate benefit even more from salary sacrifice as the income tax saving is greater. The BiK calculation uses UK-wide rates.