Salary Sacrifice for EVs: Complete UK Guide
Save 20-45% on an electric vehicle through your employer's salary sacrifice scheme. The 2% BIK rate makes this the most tax-efficient way to drive an EV.
2%
BIK Rate
20-45%
Tax Saving
£85-£480
Monthly Saving
Insurance
Includes
How Salary Sacrifice Works
Check employer scheme
Your employer must offer a salary sacrifice scheme. Many large employers and some SMEs now offer EV salary sacrifice.
Choose your EV
Select from available vehicles. Most EVs qualify — check with your scheme provider for their approved list.
Salary sacrifice agreed
You agree to sacrifice a portion of your gross salary. This amount is deducted before income tax and National Insurance.
BIK tax applied
You pay Benefit in Kind tax at just 2% of the car's P11D value — much lower than petrol/diesel cars.
Drive your EV
Your employer leases the EV on your behalf. Insurance and maintenance are often included in the monthly cost.
Tax Savings by Salary
Estimated monthly savings on a £35,000 EV (36-month lease)
| Salary | Tax Rate | Monthly Saving | Total (3 years) |
|---|---|---|---|
| £25,000 | 20% | £85 | £2,040 |
| £35,000 | 20% | £120 | £2,880 |
| £50,000 | 40% | £195 | £4,680 |
| £75,000 | 40% | £290 | £6,960 |
| £100,000 | 40% | £385 | £9,240 |
| £125,000 | 45% | £480 | £11,520 |
Salary Sacrifice Providers
Zenith
Terms: 24-60 months
Brands: Wide range
One of the largest SS providers
Swedish
Terms: 24-48 months
Brands: Premium & mainstream
Strong SME focus
LeasePlan
Terms: 24-60 months
Brands: All major brands
Fleet specialist
ALD Automotive
Terms: 24-48 months
Brands: Wide range
Global provider
Arval
Terms: 24-60 months
Brands: All major brands
Part of BNP Paribas
Frequently Asked Questions
How does salary sacrifice work for EVs?
Your employer leases an EV on your behalf. The monthly lease cost is deducted from your gross salary before tax. You pay Benefit in Kind (BIK) tax at just 2% of the car's value, rather than your normal income tax rate.
How much can I save with salary sacrifice?
Savings depend on your tax rate. Higher rate (40%) taxpayers save the most — typically £3,000-£9,000+ over a 3-year lease. Basic rate (20%) taxpayers save £1,500-£3,000+.
Can I use salary sacrifice on any EV?
Most EVs qualify. Your scheme provider will have an approved vehicle list. The car must be a company car (not a personal car) and registered to your employer.
What happens if I leave my job?
If you leave, you may need to return the car or take over the lease. Check your scheme's terms — some allow you to transfer the lease to a new employer.
Do I own the car at the end?
No. Salary sacrifice is a lease arrangement. At the end of the term, you return the car. Some schemes offer the option to extend or take a new vehicle.
What about insurance?
Insurance is typically included in the monthly salary sacrifice payment. The car is insured as a company car. Check with your scheme provider for details.
Can I add a personal contribution?
Some schemes allow a personal contribution on top of the salary sacrifice. This can reduce the BIK tax further, but check with your employer.
Is salary sacrifice better than PCP?
For most employees, yes. Salary sacrifice offers tax savings that PCP cannot match. A £35,000 EV on salary sacrifice can cost 30-40% less than the same car on PCP when you factor in tax savings.
Disclaimer: Savings estimates are illustrative. Actual savings depend on your salary, the vehicle, and your employer's scheme terms. Always consult with a tax advisor.