SALARY SACRIFICE
Electric vehicle salary sacrifice.
Lease a new electric car through your employer's payroll, sacrifice gross salary to cover the lease, and save income tax and NI. The 4 percent BIK rate for 2026/27 still makes electric the cheapest company-car choice.
To check whether the tax, NI and PAYE lines look right on your own slip, see How do I check my payslip is correct?.
Educational estimates only. Not tax, legal, financial, payroll or employment advice. Verify with your employer's payroll team or HMRC.
Related
Common questions
How does an EV salary sacrifice work?
You sacrifice an amount of gross salary equal to (or close to) the monthly EV lease cost. Your employer pays the leasing company directly. You save income tax and NI on the sacrificed amount. You owe Benefit-in-Kind on the car at 4 percent of P11D value for 2026/27, rising to 5 percent for 2027/28.
How much can I save?
A 40 percent taxpayer typically saves 40 percent income tax + 2 percent NI = 42 percent of the sacrificed amount, less the 4 percent BIK on the car's P11D value. On a £600/month lease for a £40,000 EV, that is roughly £252/month back in your pocket vs paying out of net.
What happens if I leave the job mid-lease?
Most schemes have an Early Termination clause that lets you exit at a fee, transfer the lease to your new employer (if they have a similar scheme), or buy out the remaining months. Always check your scheme paperwork before signing.
Will EV salary sacrifice survive after 2028?
BIK rates are scheduled to rise: 4 percent for 2026/27, 5 percent for 2027/28, 7 percent for 2028/29 and 9 percent for 2029/30 (confirmed at Autumn Budget 2024). Rates beyond 2029/30 have not yet been announced. The scheme remains tax-efficient at every step, but the gap between EV BIK and petrol/diesel BIK closes each year.
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Open the toolPayslipIQ provides educational information and estimated calculations only. It does not provide tax, legal, financial, payroll, accounting, pension, benefits or employment advice. Always verify your payslip, tax code, deductions and take-home pay with your employer's payroll department, HMRC, your pension provider, a qualified accountant, tax adviser or another appropriately qualified professional.