How EV salary sacrifice works
Salary sacrifice lets you swap a portion of your gross salary for a non-cash benefit, in this case a fully electric lease car. Because the lease is paid from gross income, you do not pay income tax or employee National Insurance on that portion of your pay. For a higher-rate taxpayer the combined saving is 48p in the pound on the sacrificed amount, before BiK.
The tax mechanics in plain English
Three numbers drive the outcome. First, the income tax saved on the sacrifice, at your marginal rate of 20%, 40% or 45%. Second, the employee National Insurance saved, at 8% on the band where most earners sit. Third, the benefit-in-kind charge for having a company car. For fully electric cars the BiK rate is 4% of the P11D value in 2026/27, far below the 25% or more that applies to most petrol and diesel cars.
Why EVs are particularly good for salary sacrifice
The low BiK rate is the headline reason. A higher-rate driver in a £40,000 EV pays roughly £53 a month in BiK, against £200 to £300 a month for a comparable petrol car. Combine that with income tax and NI savings on the lease and a typical net cost lands 30% to 40% below an equivalent personal lease.
What the BiK changes mean for future years
HM Treasury has confirmed the EV BiK rate will rise by 1 percentage point each year, reaching 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30. Even at 9%, EVs remain materially cheaper than petrol cars on company-car tax. Build the higher rate into your thinking if you are signing a 4-year lease.
Employer benefits
Employers save 13.8% in secondary National Insurance on the sacrificed amount and many add a small admin margin or share the saving back. Most schemes are revenue-neutral or modestly positive for the employer, which is why they are spreading quickly.
Things to watch
Salary sacrifice schemes are tied to your employment. If you leave the company, are made redundant or take long-term sick leave, the lease usually needs to be handed back or paid off. Most reputable providers include early-termination protection in the monthly cost; check this is the case before signing. Also confirm whether maintenance, tyres, breakdown cover and insurance are included.
Why TrustWatt is independent
TrustWatt does not sell salary sacrifice leases and does not take referral commissions. This calculator exists to help you make an informed decision and to surface what real owners say about each model, rather than to funnel you to a particular provider.
These figures are estimates. Your employer's actual scheme will have its own pricing, admin fees and early-termination terms. Use this calculator to size the opportunity, then ask your employer's scheme provider for a formal quote on the specific car you want.