A guide to salary sacrifice cars: Everything you need to know

You might have heard of EV salary sacrifice and wondered what the catch is. Is it actually cheaper? Is it complicated? And why does everyone keep talking about it?

In this guide, we’ll cover:

• What is a salary sacrifice car?
• What cars can you get on a salary sacrifice scheme?
• What are the benefits of a salary sacrifice car scheme?
• Why are electric cars leading the way in salary sacrifice?
• How do you choose the right salary sacrifice car?
• How do you get started?

We’ll keep it simple: no jargon, no fluff, no sales pitches. Just the plain old facts, so you can work out whether it’s the best option for you.

At its simplest, a salary sacrifice car is a vehicle you lease through your employer. Instead of paying from your take-home pay, the monthly cost is taken from your gross salary before tax.

Because your taxable income is reduced, you can save on Income Tax and National Insurance. Your employer can also make savings on their National Insurance contributions.

As with all salary sacrifice cars, you will still pay Benefit in Kind tax on it. But with electric vehicles currently attracting much lower BiK rates than petrol or diesel cars, salary sacrifice works out far more cost-effective for most employees.

There’s usually something to suit different needs and lifestyles.

There are smaller, city-friendly options like the Dacia Spring or Renault Zoe. Then there are mid-sized cars such as the Peugeot e‑208 or the Vauxhall Mokka‑e. Or if you want to splash out, there are more premium models, like the Tesla Model Y or the XPENG G6 Estate. 

Our salary sacrifice scheme focuses exclusively on EVs, which mean your team can enjoy bigger savings while driving a cleaner, greener car. It’s worth bearing in mind that, although some providers also offer hybrid, petrol or diesel cars, the tax savings on those are usually smaller because of higher Benefit-in-Kind (BiK) rates. 

What’s in it for you? Well, potentially quite a lot.

The exact benefits will depend on your salary, tax bracket, and the car you choose. But for many employees, salary sacrifice can mean lower monthly costs, simpler budgeting, and access to a brand-new electric car with most of the big expenses wrapped into one payment.

Employees benefit from:

• Tax savings: You could save on National Insurance and Income Tax, potentially up to 40% on a brand-new EV, depending on your tax bracket. Not everyone will see the same figures, but the savings can be significant.
• All-inclusive packages: Our salary sacrifice scheme bundles maintenance, insurance, and breakdown cover into one monthly payment. It tends to make budgeting much simpler.
• No upfront costs: You can get behind the wheel of a new car without a big deposit. That often makes it a lot more realistic than buying outright.

And employers get to:

• Attract and retain talent: The overwhelming majority of employees (74%) want their employer to offer an EV salary sacrifice scheme. Not everyone will be swayed by a car, but it can make your benefits package more appealing.
• Boost your benefits package for free: There’s zero cost involved in setting up our scheme. Employees pay for their cars from their own salary contributions, so there’s no need to set an extra budget aside. 
• Save on National Insurance contributions: For each car taken through the scheme, businesses can reduce their Employer National Insurance contributions. Many companies choose to pass some of these savings back to employees, helping make the cars more affordable.

Electric cars have become the star of the salary sacrifice scene, and for good reason.

Tax efficiency

Ultra-low Benefit-in-Kind (BiK) rates = bigger savings

Lower running costs

Electricity is cheaper than petrol, and fewer moving parts means less maintenance

Environmental impact

Cut emissions and make a positive contribution to the planet

1 / 3

Not every car suits every employee, but EVs are increasingly the practical and popular choice. 

Finding the right car doesn’t have to feel like a puzzle. Here are the key things to think about:

• Budget: Be realistic about how much you’re happy to spend from your pre-tax salary. Make sure the monthly payment works for you without stretching your take-home pay too far.
• Lifestyle needs: How will you actually use the car? A spacious SUV for family trips, a compact city car for zipping around town, or a reliable long-commute option?
• Fuel type: EVs are the tax-efficiency champions with lower Benefit-in-Kind rates, but hybrids or petrol cars are still available (though less tax-efficient).
• Charging: If you’re considering an EV, think about how you’ll charge it. Home charging is usually cheaper and more convenient than public charging, and smart tariffs like Intelligent Octopus Go can save you even more.
• Features and extras: Remember that maintenance, breakdown cover, and insurance are all included in our scheme. Also think about the tech, comfort, and safety features that matter to you.
• Environmental goals: If sustainability is a priority, an EV can align with your values while still saving money.

Take your time comparing options. Our platform lets you see multiple cars side by side, making it easier to pick the one that fits both your lifestyle and budget.

Still got questions? Here are some quickfire answers to the ones we’re asked most often.

What cars can I choose? We focus exclusively on EVs, with options ranging from smaller city cars to mid-sized and premium models. This keeps tax savings high and the ride sustainable. You can check out your options here.

What happens if I leave my job or take extended leave? We get it: life happens, and our scheme usually has your back. If you leave after three months, the car can be returned with no extra fees. For parental leave or long-term sickness, employees can often keep the car for a few months, and any temporary payments are credited back.

What’s included? Everything in one monthly payment: your car, insurance, servicing, maintenance, breakdown cover, a discounted energy tariff, and either a free home charger (if you have somewhere to install it) or 4,000 miles of public charging with Electroverse.

Is it tax-efficient? Yes. Driving an EV through our scheme means you pay much lower Benefit-in-Kind rates and reduce your taxable income, making the car more affordable overall.

Wherever you are on your salary sacrifice car journey, here’s how to take the next step.

If your employer doesn’t yet offer EV salary sacrifice:

• Talk to your employer: Bring up the idea with your HR team or manager, letting them know the benefits for employees and the company.
• Do your research: Familiarise yourself with how salary sacrifice works and any questions your company might have.
• Make the case for it: Check out our handy cheat sheets to help you convince key decision-makers and get things moving.

If your employer already offers our scheme:

• Explore your options: Look at the cars we’ve got available and think about what fits your lifestyle and budget. And if you’re still not sure, why not ask a colleague how they’re finding it?
• Crunch the numbers: Use our salary sacrifice calculator to understand the savings you could make.
• Sign up: Pick your car, fill out the paperwork (we promise there isn’t too much), and get ready to enjoy your new ride.

If you’re an employer considering our scheme:

• Check it’s a good fit: Use our ready-made employee survey to make sure the scheme meets their needs.
• Get in touch with us: We’ll walk you through what’s needed, then we’ll manage most of the admin and make the setup process as simple as possible.
• Get your team excited: Once live, explain the scheme clearly so employees understand how to get a car through salary sacrifice.

Whether you’re an employee looking to join a scheme or an employer ready to offer one, sign up today. It only takes five minutes, and we’ll make the rest easy for you.