Electric Car Salary Sacrifice Calculator
See the real monthly cost of an electric car through salary sacrifice, after tax and National Insurance savings and the Benefit-in-Kind charge. Updated for the 2026/27 tax year.
Car and salary details
What the car costs you
| Per year | Per month | |
|---|---|---|
| Gross lease cost | £5,400 | £450 |
| Income tax saved | £1,080 | £90 |
| National Insurance saved | £432 | £36 |
| Benefit-in-Kind tax | £320 | £27 |
| Net cost to you | £4,208 | £351 |
The gross lease cost comes out of your salary before tax, so the real cost to you is the net figure above. Benefit-in-Kind tax is the small charge for having the car, applied to 4% of the list price and taxed as income at your usual rate.
What it means for the employer
Most EV salary sacrifice schemes are cost-neutral or better for the employer. The figures below show the net National Insurance position for one car.
Lease cost, insurance, maintenance and breakdown cover are usually bundled by the provider and met by the employee through the sacrifice, so the scheme itself typically costs the employer nothing to run.
How electric car salary sacrifice works
Salary sacrifice lets an employee give up part of their gross salary in exchange for a leased electric car. Because the sacrifice comes out of pay before income tax and National Insurance are calculated, both the employee and the employer save. The employee then pays a small amount of Benefit-in-Kind tax on the car, which is what makes electric vehicles so much cheaper to run this way than a petrol or diesel equivalent.
What is Benefit-in-Kind and why is it so low for EVs?
Benefit-in-Kind is the tax you pay for having a car provided through work. It is charged on a percentage of the car's list price, and for pure electric cars that percentage is just 4% in 2026/27. It rises gradually to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30, where it is capped. Even at 9%, an electric car is far more tax-efficient than a petrol or diesel car, which can be charged at up to 36%.
Why the 2017 salary sacrifice clampdown does not apply
In 2017 the government restricted the tax advantages of most salary sacrifice schemes through the Optional Remuneration Arrangement rules. Cars emitting 75g/km of CO2 or less, which includes every pure electric vehicle, are exempt from those rules. That is why EV salary sacrifice keeps its full tax advantage and has become one of the fastest-growing UK employee benefits.
Who saves what?
The employee saves income tax and National Insurance at their marginal rate on every pound sacrificed, less the Benefit-in-Kind charge. The employer saves 15% employer National Insurance on the sacrificed salary, and pays 15% Class 1A National Insurance on the Benefit-in-Kind value, which still leaves a net saving for the business on most cars.
Compare EV salary sacrifice providers
Once the numbers stack up, the next step is choosing a scheme. Compare UK electric car salary sacrifice providers on cover, cost and early-termination protection in the PerkIQ directory.
Compare EV providersElectric car salary sacrifice: common questions
How does electric car salary sacrifice work?
You agree to give up part of your gross salary in exchange for a leased electric car. Because the sacrifice comes out of your pay before income tax and National Insurance are calculated, you save both, and your employer saves on employer National Insurance too. You then pay a small amount of Benefit-in-Kind tax on the car, which the calculator shows in full.
What is the Benefit-in-Kind rate for electric cars in 2026/27?
The Benefit-in-Kind rate for pure electric cars is 4% for the 2026/27 tax year. It rises to 5% in 2027/28, 7% in 2028/29, and 9% in 2029/30, where it is capped. Even at 9% an EV is far more tax-efficient than a petrol or diesel car, which can reach 36%.
How much can I save with EV salary sacrifice?
It depends on your salary, the car's list price and the monthly lease cost. A basic rate taxpayer typically saves around 28% on the sacrificed amount through income tax and National Insurance relief, and a higher rate taxpayer around 42%, less the small Benefit-in-Kind charge. Enter your figures in the calculator above to see your own net monthly cost and the saving against leasing privately.
Does the 2017 salary sacrifice clampdown apply to electric cars?
No. Cars emitting 75g/km of CO2 or less, which includes all pure electric vehicles, are exempt from the Optional Remuneration Arrangement rules introduced in 2017. That is why EV salary sacrifice keeps its full tax advantage when most other car schemes lost theirs.
What happens if I leave my job during the lease?
The lease is usually linked to your employment, so leaving can mean the arrangement ends early. Most providers offer early-termination protection that covers redundancy, long-term sickness, maternity and resignation, but the cover varies, so check what is included and from what point it applies before you commit.
Does EV salary sacrifice affect my pension or mortgage?
It reduces your gross salary on paper, which can affect anything calculated from it, such as mortgage borrowing or salary-linked benefits, and your sacrifice cannot take your pay below the National Minimum Wage. As long as your earnings stay above the lower earnings limit, paying less National Insurance does not reduce your State Pension entitlement.
