EV Salary Sacrifice Savings Calculator for the UK

What is EV salary sacrifice and how much can you save?

Salary sacrifice for electric cars is an arrangement where your employer leases an EV on your behalf, and you repay the cost through a reduction in your gross salary before tax and National Insurance are calculated. Because the money comes out before tax, you make the payment in pre-tax pounds, not post-tax pounds, which makes the effective monthly cost dramatically lower than the list monthly rental would suggest.

For a basic-rate (20%) taxpayer, the saving is approximately 28% compared to paying from take-home pay. For a higher-rate (40%) taxpayer, it is around 42%. That is before accounting for the Benefit in Kind rate on electric cars, which at 4% in 2026-27 is the lowest for any car type and adds only a small taxable benefit.

Use the calculator above to enter your gross salary, your tax band, and the monthly lease cost of the car you are considering. It will show you the net monthly cost after income tax and NI relief, the BiK tax due, and your net monthly outgoing compared to buying or leasing privately.

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How the calculator works

Enter:

1. Your gross annual salary. The higher your salary and tax band, the larger the saving from salary sacrifice.

2. Your income tax band. In 2026-27: basic rate (20%) applies to income between £12,571 and £50,270; higher rate (40%) applies from £50,271 to £125,140; additional rate (45%) applies above £125,140.

3. The gross monthly lease cost. This is the amount your employer pays for the car lease. Most salary sacrifice providers show this figure before any tax adjustment.

4. The car’s P11D value. This is the car’s list price including VAT and delivery, excluding first registration fee and road tax. You need this to calculate the Benefit in Kind charge that is added to your taxable income.

The calculator applies:

• Income tax relief on the salary sacrificed (20%, 40% or 45%)
• National Insurance relief (8% for earnings in the basic rate band; 2% above £50,270)
• The BiK charge: P11D value × 4% (2026-27 EV rate) × your income tax rate ÷ 12 to give a monthly cost

It then shows your actual net monthly cost.

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Results table: sample net monthly costs by tax band, 2026-27

The table shows the net monthly cost for a car with a gross lease rental of £400 per month and a P11D value of £35,000. Your figures appear in the calculator above.

Tax band	Gross monthly lease	Income tax relief	NI relief	BiK tax/month	Net monthly cost
Basic rate (20%)	£400	£80	£32	£9	£297
Higher rate (40%)	£400	£160	£8	£18	£250
Additional rate (45%)	£400	£180	£8	£20	£248

Assumptions: P11D £35,000, EV BiK 4% (2026-27), NI 8% basic rate / 2% higher rate. BiK calculated as £35,000 × 4% × tax rate ÷ 12.

For comparison: leasing the same car privately at £400/month from take-home pay costs a higher-rate taxpayer effectively around £667 per month of gross salary, because they would need to earn £667 gross to have £400 after income tax and NI. Through salary sacrifice, they give up £400 of gross salary and get the car. The difference, around £267 per month or over £3,200 per year, is the core financial advantage.

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Why the BiK rate on electric cars makes such a difference

Benefit in Kind tax is not a payment you make directly. It is added to your taxable income as if it were salary, and you pay income tax on it at your marginal rate. The amount added is calculated as:

P11D value × BiK percentage = taxable benefit

For an electric car with a P11D of £40,000 in 2026-27:

£40,000 × 4% = £1,600 taxable benefit per year

A basic-rate taxpayer pays 20% of £1,600 = £320 per year (£27 per month) in BiK tax.

A higher-rate taxpayer pays 40% of £1,600 = £640 per year (£53 per month).

Now compare that to a petrol equivalent at a 30% BiK rate:

£40,000 × 30% = £12,000 taxable benefit per year

A basic-rate taxpayer pays £2,400 per year (£200 per month).

A higher-rate taxpayer pays £4,800 per year (£400 per month).

The BiK tax on the electric car is therefore roughly 12 times lower than the petrol equivalent for a higher-rate taxpayer. This is why salary sacrifice specifically for electric cars is so financially compelling in a way that salary sacrifice for petrol cars is not.

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BiK rates: what is coming over the next four years?

The current low BiK rate on electric cars will not last indefinitely. HMRC has published the rates up to 2029-30:

Tax year	EV BiK rate	Petrol (120g/km CO2) BiK rate
2025-26	3%	28%
2026-27	4%	29%
2027-28	5%	30%
2028-29	7%	31%
2029-30	9%	32%

The EV rate is rising, but it remains dramatically below petrol rates throughout this period. Even at 9% in 2029-30, the EV BiK rate is less than one-third of a petrol car at the same CO2 band. Salary sacrifice for EVs will remain advantageous through the decade.

If you are considering a three or four-year lease starting now, it will span tax years 2026-27 through to 2029-30. Over that period, BiK rates will rise from 4% to 9% for the electric car. Your monthly BiK tax will increase accordingly: budget for around an extra £5-£15 per month by the final year depending on your tax band and the P11D value.

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What does salary sacrifice include beyond the car?

Most employer salary sacrifice schemes wrap several costs into the single monthly deduction:

• The car lease itself (depreciation, finance, profit margin)
• Road tax (VED, currently £10 in year one and £200 per year thereafter for new EVs)
• Manufacturer warranty and breakdown cover
• Tyre cover (on some schemes)
• Maintenance and servicing (on fully maintained schemes)
• Insurance (on some schemes, though not all)

The key variable is maintenance. A “fully maintained” salary sacrifice lease includes servicing, tyres and wear items. If your scheme includes this, the true comparison to running a private car should include those costs: annual EV servicing of roughly £150-£200 and tyres.

Always check exactly what is included in the monthly figure your employer quotes before comparing it to private lease or finance quotes.

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The myth: salary sacrifice costs the employer nothing

This is almost true but not quite. Employers save the 15% employer National Insurance contributions on the salary sacrificed, which means they actually come out ahead financially if they negotiate good lease rates. This is why many employers actively promote salary sacrifice schemes: it is a benefit that costs them nothing net and improves recruitment and retention.

However, salary sacrifice does reduce an employee’s gross pay, which can affect:

• Mortgage affordability assessments (lenders typically use gross salary, and a reduced gross figure may lower the maximum mortgage)
• Pension contributions if these are calculated as a percentage of gross salary
• State benefit eligibility in some edge cases

Before entering a scheme, confirm with your HR department how your pensionable pay is defined, and if a mortgage application is imminent, discuss the timing with a mortgage broker.

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Who qualifies for salary sacrifice?

To use a salary sacrifice scheme:

• You must be an employee, not self-employed or a sole trader
• Your employer must offer a scheme (not all do; the sector is growing, with the BVRLA reporting over 500,000 salary sacrifice cars on the road in the UK by early 2026)
• Your salary after the sacrifice must remain at or above the National Living Wage (£12.21 per hour in 2026, which is around £23,770 per year for a 37.5-hour week)

If the sacrifice would take you below the National Living Wage, the scheme cannot proceed for that car at that price. This is most relevant for lower-paid employees considering higher-value vehicles.

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How salary sacrifice compares to leasing privately

For a higher-rate taxpayer considering a car with a gross lease rental of £500 per month:

Private lease (paid from take-home):

• Effective gross salary needed to fund £500 net: approximately £862 (at 40% tax + 2% NI)
• Annual gross cost: £10,344

Salary sacrifice (same car):

• Gross salary sacrificed: £500 per month = £6,000 per year
• BiK tax (P11D £42,000, 4%): £672 per year
• Total annual cost: £6,672
• Saving: approximately £3,672 per year

This saving is the structural advantage of salary sacrifice for higher-rate taxpayers. The saving is smaller but still meaningful for basic-rate taxpayers.

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What should you do next?

If your employer already offers a scheme, ask HR for the provider’s calculator or website login. Most providers (Octopus Electric Vehicles, The Electric Car Scheme, Zenith, Fleet Alliance and others) have online portals where you can browse available models, see the gross monthly cost and the net cost calculation for your tax band.

If your employer does not yet have a scheme, the BVRLA’s member directory lists approved providers. Schemes can typically be set up within a few months and require minimal admin burden for smaller employers.

For a deeper look at how the full company car picture works, including fleet policy, car allowances and the choice between a company car and a cash alternative, see our company cars, salary sacrifice and fleet guide. To see which electric cars work best within salary sacrifice by monthly cost, see our best electric cars for salary sacrifice page.

The numbers in 2026 are clear: for anyone in the 40% tax band, salary sacrifice for an electric car is one of the most efficient uses of pre-tax income available. Even for basic-rate taxpayers, the saving of around 28% against private costs is substantial over a three or four-year lease.