See what an electric car on a salary sacrifice scheme actually costs you each month, after the tax and National Insurance you save and the benefit-in-kind tax you pay.
Gross sacrifice
Tax & NI saved
BIK tax
True cost a month
A guide only. Assumes the sacrifice stays within the basic or higher-rate band and your pay stays above the minimum wage. National Insurance is taken at 8% for basic-rate and 2% for higher and additional-rate earners.
Worked out at https://sumlytools.com/ev-salary-sacrifice-calculator/ — a guide only, not financial advice.
How salary sacrifice makes an EV cheaper
With salary sacrifice, your employer takes the cost of the car out of your gross pay, before income tax and National Insurance are worked out. So you never pay tax or NI on that part of your salary. A higher-rate taxpayer giving up £500 a month only sees their take-home pay fall by about £290, because the other £210 would have gone to the taxman anyway.
The catch: benefit-in-kind tax
In return, you pay a small tax on the perk of having the car, called benefit-in-kind. For electric cars this is very low: just 4% of the car's list price in 2026/27. On a £40,000 car, that's £1,600 of taxable benefit, costing a 40% taxpayer £640 a year, or about £53 a month. Petrol and diesel cars are taxed on 25% to 37% of their value, which is why the savings only really work for EVs.
A worked example
Take a £40,000 electric car with a £500 a month gross lease, for a 40% taxpayer in 2026/27. The sacrifice saves £3,480 a year in tax and NI, so take-home pay drops by £2,520. Add £640 of BIK tax, and the true cost is about £3,160 a year, or £263 a month, for a car that would cost far more to lease privately.
Things to check first
Your salary can't drop below the minimum wage after the sacrifice. Leaving the scheme early, for example if you change jobs, can carry an early-termination charge, so you need to be fairly sure you'll stay. The BIK rate rises by one percentage point a year to 9% by 2029/30, still low, but worth factoring in on a longer lease. Once you've got your monthly cost, see what it costs to drive with our EV running cost calculator.
Frequently asked questions
How does EV salary sacrifice save money?
You give up part of your gross salary to pay for the car, so you don't pay income tax or National Insurance on that slice. A 40% taxpayer saves 42% of the sacrificed amount. You then pay a small benefit-in-kind tax instead, which for electric cars is just 4% of the car's value in 2026/27.
What is benefit-in-kind on an electric car?
Benefit-in-kind (BIK) is the tax on a perk from your job. For fully electric cars it is 4% of the car's list price in 2026/27, rising to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30. You pay income tax on that amount at your usual rate.
Is salary sacrifice worth it for an EV?
For most taxpayers it's much cheaper than leasing a car personally, because of the tax and National Insurance savings and the very low BIK on electric cars. Check your salary won't drop below the minimum wage after the sacrifice, and that you'll keep the car long enough, as leaving early can carry charges.
Does salary sacrifice affect my pension or mortgage?
It lowers your gross salary, which can reduce pension contributions based on salary and the income figure a mortgage lender uses. Many schemes protect your pension; ask your employer. It can also help if it brings you under £100,000 and out of the 60% tax trap.