Electric Car Salary Sacrifice: Is It Worth It? (2026/27 UK Guide)

Electric car salary sacrifice has become one of the most talked-about employee benefits in the UK, and for good reason. The short answer to whether it is worth it: for most higher-rate taxpayers, yes. Because the cost comes out of gross pay and the company-car tax on an electric car is very low, salary sacrifice can cut the real cost of a new EV by roughly a third to a half compared with a personal lease. The saving is smaller for basic-rate taxpayers, but the scheme can still stack up.

PerkIQ does not sell salary sacrifice schemes. This is an independent guide with no referral fees or commission. Where we can, we use our provider relationships to get discounts for our users instead. For your own numbers, use our electric car salary sacrifice calculator.

How does electric car salary sacrifice work?

Your employer leases an electric car and you pay for it out of your gross salary, before income tax and National Insurance are taken. In return you get a brand-new EV with insurance, servicing, maintenance and breakdown cover usually bundled in. On top, you pay a small amount of company-car tax (benefit-in-kind), which for an electric car is currently very low.

Because the payments reduce your taxable salary, you avoid the income tax and National Insurance you would otherwise have paid on that money. That is where the saving comes from, and it is why the benefit is worth more to higher earners, who would otherwise be taxed at a higher rate.

Is electric car salary sacrifice worth it?

For most higher-rate (40%) and additional-rate (45%) taxpayers, it is one of the most tax-efficient ways to drive a new car. For basic-rate (20%) taxpayers it can still work, but the saving is smaller, so it is worth running the numbers before committing. The people it rarely suits are those earning close to the National Minimum Wage, since you cannot sacrifice salary below it, and anyone who only wants a cheap used car outright.

How much can you save?

It depends on your tax band, the car's list price and the lease term, so there is no single number. As a rule of thumb, a higher-rate taxpayer can save somewhere between a third and a half of the cost of a like-for- like personal lease. The calculator will give you a figure for a specific car and salary.

What is the benefit-in-kind on an electric car?

For the 2026/27 tax year, the benefit-in-kind rate on a fully electric company car is 4% of its list price. It is rising gradually, to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30, but it remains far below petrol and diesel cars, which typically sit between 25% and 37%. That low rate is the second half of the saving: the taxable benefit you pay tax on is small.

What is included?

Most schemes bundle insurance, servicing, maintenance, tyres, breakdown cover and the MOT into the monthly figure, so the main thing you pay for separately is the electricity to charge the car. Exactly what is included varies by provider, so check each scheme's package before comparing monthly prices.

What happens if you leave, or go on maternity or sick leave?

The car is tied to your employment, so leaving your job usually ends the arrangement. Some schemes include early-termination protection that covers the cost; others may charge a fee, so read the terms first. Salary sacrifice can also reduce your pay during maternity or long-term sick leave, which affects statutory pay calculations, so it is worth understanding the protections before you sign up.

Best electric car salary sacrifice providers

The right provider depends on whether home charging, used-car options or established scale matter most to you. We have profiles of the main UK EV salary sacrifice providers in our electric vehicle directory, plus head-to-head comparisons of Octopus EV and Tusker, Octopus EV and The Electric Car Scheme, and Tusker and The Electric Car Scheme.

Where PerkIQ fits

An EV scheme is one part of a wider benefits package. If you want to see how your salary sacrifice and lifestyle benefits compare with best practice, you can run a free benefits healthcheck in about five minutes, or browse EV providers in our directory.

Frequently asked questions

Is salary sacrifice for an electric car worth it?

For most higher-rate and additional-rate taxpayers, yes. Because the cost comes out of gross pay, before income tax and National Insurance, and the company-car tax on an electric car is very low, salary sacrifice can cut the real cost of a new EV by roughly a third to a half compared with a personal lease. The saving is smaller for basic-rate taxpayers but the scheme can still work.

How much does electric car salary sacrifice save?

It depends on your tax band, the car's list price and the lease term, so use a calculator for your own numbers. As a rule of thumb, a higher-rate taxpayer can save somewhere between a third and a half of the cost of a like-for-like personal lease, because the payments avoid income tax and National Insurance.

What is the benefit-in-kind rate on electric cars?

For the 2026/27 tax year the benefit-in-kind rate on a fully electric company car is 4% of its list price. It rises gradually to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30, but stays far below petrol and diesel cars, which typically sit between 25% and 37%.

What happens to my salary sacrifice car if I leave my job?

The car is tied to your employment, so leaving usually ends the arrangement. Some schemes include early-termination protection, but others may charge a fee, so check the terms before you sign. The same applies if you are made redundant or go on long-term sick or maternity leave, which can also affect the amount you sacrifice.

Can I get a used electric car on salary sacrifice?

Some providers offer used or ex-demo EVs as well as new cars, which can lower the monthly cost. Availability varies by provider, so if a used EV matters to you, check which schemes support it before choosing.

Is electric car salary sacrifice available to basic-rate taxpayers?

Yes. Basic-rate taxpayers can use the scheme and still save, because the payments come out of gross pay and avoid National Insurance as well as basic-rate income tax. The saving is just smaller than it is for higher-rate taxpayers. You cannot sacrifice below the National Minimum Wage, which can rule out lower earners.