Written and reviewed by James Whitfield · Updated for 2026/27 · Editorial standards · Methodology
Worked electric-car salary sacrifice examples for 2026/27 at £30,000, £50,000 and £80,000 salaries: gross sacrifice, income tax and NI saved, the 4% Benefit-in-Kind charge, and the true net monthly cost compared with paying the same lease from take-home pay.
With an EV salary sacrifice scheme you give up gross salary equal to the lease cost, so you save income tax and NI at your marginal rate (28% below £50,270, 42% above) and pay Benefit-in-Kind tax on just 4% of the car's list price in 2026/272. Worked examples: on £30,000 a £400 a month sacrifice for a £30,000 car costs £308 net; on £50,000 a £500 sacrifice for a £40,000 car costs £386.67; on £80,000 a £700 sacrifice for a £55,000 car costs £479.33. Savings of 23% to 32% against paying the same lease from take-home pay.
Typical default outputs for quick context.
Under an electric car salary sacrifice scheme your employer leases the car and you agree to a reduction in gross salary equal to the monthly lease cost. Because the reduction happens before income tax and National Insurance are calculated, you save tax and NI at your marginal rate on the sacrificed amount1. The car is then a company car, so you pay a Benefit-in-Kind (BiK) charge on it instead, but for zero-emission cars that charge is deliberately small.
The saving therefore has three moving parts: the tax and NI you no longer pay on the sacrificed salary, the BiK tax you now pay on the car, and the employer NI saving (15% in 2026/27), which some employers share with staff through a lower monthly figure. The examples below use the 2026/27 rates for an employee in England on tax code 1257L, with no other benefits, pension or student loan.
The taxable value of a company car is its P11D list price multiplied by an appropriate percentage set by CO2 emissions. For cars with zero emissions the percentage is 4% in 2026/27, up from 3% in 2025/26, and rising to 5% in 2027/28 under the published schedule2. You pay income tax on that value at your marginal rate (20% or 40%); there is no employee NI on it, though your employer pays Class 1A NI.
Salary sacrifice cars are normally caught by the optional remuneration rules, which tax the higher of the BiK value and the salary given up. Cars emitting 75g/km or less, which includes every pure electric car, are exempt from those rules, so the 4% BiK figure stands even though the salary you sacrifice is far higher5. The BiK is usually collected by reducing your tax code (a £1,200 benefit turns 1257L into 1137L) or by payrolling.
| Tax year | BiK rate for 0 g/km cars | Annual BiK tax on a £40,000 car (20% / 40% taxpayer) |
|---|---|---|
| 2025/26 | 3% | £240 / £480 |
| 2026/27 | 4% | £320 / £640 |
| 2027/28 | 5% | £400 / £800 |
A basic-rate taxpayer on £30,000 sacrifices £400 a month (£4,800 a year) for a car with a £30,000 P11D value. Taxable pay falls to £25,200, saving 20% income tax and 8% NI on the £4,80034. The BiK value is 4% of £30,000 = £1,200, taxed at 20%.
| Item | Per month | Per year |
|---|---|---|
| Gross salary sacrificed | £400.00 | £4,800.00 |
| Income tax saved (20%) | £80.00 | £960.00 |
| Employee NI saved (8%) | £32.00 | £384.00 |
| Reduction in take-home pay | £288.00 | £3,456.00 |
| BiK tax (£30,000 x 4% x 20%) | £20.00 | £240.00 |
| Net monthly cost of the car | £308.00 | £3,696.00 |
Paying the same £400 lease from take-home pay would cost £400. Through sacrifice it costs £308, a 23% saving. Monthly take-home falls from £2,093.30 to £1,805.30, and the BiK is collected separately through a reduced tax code.
At £50,000 the employee is just under the £50,270 higher-rate threshold, so the whole sacrifice comes off basic-rate pay: taxable salary drops to £44,000. The car has a £40,000 P11D value, giving a BiK of £1,600 taxed at 20%.
| Item | Per month | Per year |
|---|---|---|
| Gross salary sacrificed | £500.00 | £6,000.00 |
| Income tax saved (20%) | £100.00 | £1,200.00 |
| Employee NI saved (8%) | £40.00 | £480.00 |
| Reduction in take-home pay | £360.00 | £4,320.00 |
| BiK tax (£40,000 x 4% x 20%) | £26.67 | £320.00 |
| Net monthly cost of the car | £386.67 | £4,640.00 |
A 22.7% saving on the £500 headline. If the salary were £57,000 instead, the whole sacrifice would come off pay above £50,270 at a 42% marginal rate and the net cost would drop to about £317 a month.
A higher-rate taxpayer on £80,000 sacrifices £700 a month (£8,400 a year) for a £55,000 car. All of the sacrifice comes off income taxed at 40%, but NI above £50,270 is only 2%, so the marginal saving is 42%. The BiK of 4% x £55,000 = £2,200 is taxed at 40%.
| Item | Per month | Per year |
|---|---|---|
| Gross salary sacrificed | £700.00 | £8,400.00 |
| Income tax saved (40%) | £280.00 | £3,360.00 |
| Employee NI saved (2%) | £14.00 | £168.00 |
| Reduction in take-home pay | £406.00 | £4,872.00 |
| BiK tax (£55,000 x 4% x 40%) | £73.33 | £880.00 |
| Net monthly cost of the car | £479.33 | £5,752.00 |
A 31.5% saving on the £700 headline. Higher-rate taxpayers save the most because the tax saved on salary (40%) is much larger than the tax paid on the 4% benefit.
The pattern is consistent: the net cost is the sacrifice minus tax and NI at your marginal rate, plus a small BiK charge that scales with the car's list price. Between £100,000 and £125,140 the saving is larger still, because every £2 sacrificed also restores £1 of personal allowance, giving an effective 62% marginal rate. Employer NI at 15% adds £720, £900 and £1,260 a year respectively to the employer's side of the ledger, less Class 1A NI on the benefit.
| Salary | Gross sacrifice | Tax + NI saved | BiK tax | Net monthly cost | Saving vs paying from net pay |
|---|---|---|---|---|---|
| £30,000 | £400 | £112.00 | £20.00 | £308.00 | 23% |
| £50,000 | £500 | £140.00 | £26.67 | £386.67 | 22.7% |
| £80,000 | £700 | £294.00 | £73.33 | £479.33 | 31.5% |
The fair comparison is like for like. Scheme quotes usually bundle insurance, servicing, tyres and breakdown cover, so the headline monthly figure is often higher than a bare personal contract hire quote for the same car. Compare the scheme's all-in net cost (the bottom line in the tables above) with a personal lease plus the insurance and maintenance you would pay separately from take-home pay. Ask the provider for the P11D value and the exact gross sacrifice; both are needed to reproduce the calculation.
Current tax-year thresholds used across this guide and calculator.
For most employees, yes, provided the scheme quote is compared like for like with a personal lease plus insurance and maintenance. A basic-rate taxpayer saves about 23% of the monthly cost after the 4% Benefit-in-Kind charge; a higher-rate taxpayer saves about 30%, and someone between £100,000 and £125,140 saves more still because the sacrifice restores personal allowance.
4% of the car's P11D value, up from 3% in 2025/26 and rising to 5% in 2027/28 under the published GOV.UK schedule. A £40,000 electric car therefore has a taxable benefit of £1,600 in 2026/27, costing a basic-rate taxpayer £320 a year and a higher-rate taxpayer £640.
Sacrificing £500 a month (£6,000 a year) saves £1,200 income tax and £480 NI, so take-home falls by £360 a month. The BiK tax on a £40,000 car is £26.67 a month, giving a net cost of £386.67 against the £500 headline: a saving of £113.33 a month, or 22.7%.
It can. Your contractual salary falls, so pension contributions, life cover, statutory maternity or sick pay and lender affordability checks may be based on the lower figure unless your employer uses a notional pre-sacrifice salary. Check each before signing.
Only if the sacrifice leaves your hourly pay at or above the National Living Wage (£12.71 for 2026/27). Employers must refuse a sacrifice that would breach that floor, which is why most schemes set a minimum salary.
The lease is between your employer and the leasing company. Most schemes include early termination protection for redundancy, resignation or long-term sickness, but some pass the remaining lease cost to you. Read the termination clause before signing.
The rates, thresholds and rules on this page are drawn from the official UK government sources below, using the confirmed 2026/27 figures. Each link opens the relevant HMRC or GOV.UK page in a new tab.
Verified against published UK government guidance for 2026/27.