Salary sacrifice or personal lease: which is best for an electric car?

We get asked a lot about the differences between salary sacrifice and personal leasing. And ultimately, which is best?

But the answers to these questions aren’t always easy, and honestly, it can come down to personal preference. So, we’ve decided to run the numbers, compare what’s included, and write it all down in one place for you, so you can make an informed decision on what’s best for you.

We’re going to chat through:

• What’s the difference between salary sacrifice and personal leasing?
• Is salary sacrifice or personal leasing cheaper when it comes to electric cars?
• The monthly cost of an EV on salary sacrifice vs personal leasing
• Is EV salary sacrifice or personal leasing best for me?

Salary sacrifice is a way of getting access to a brand-new car through your gross salary and saving up to 40%. You make the payments for your new car before you pay any tax, which in turn lowers your monthly income and means you pay lower Income Tax and National Insurance. So, the money you’d usually never see because it goes straight out of your pay to HMRC will now go directly to paying for your car. Win-win!

Personal leasing is the same as a long-term rental. You’ll drive the car over a set period and return it to the leasing company at the end of the agreement.

Also, when you lease a car through personal leasing, you’ll put down an upfront deposit, make monthly payments and then either return the car to the leasing company at the end of the contract or, in some cases, pay a lump sum to keep it at the end of the lease.

Due to the tax savings, a salary sacrifice scheme is generally cheaper than a PCH lease. But, there are different costs you’ll need to consider with both salary sacrifice and personal leasing.

With a personal lease, you’ll have to consider:

• The up-front payment
• Insurance
• Servicing and maintenance
• MOT
• Repairs
• Charging costs

And, even though leasing might seem like a cheaper way to drive, the unexpected costs of running the car can quickly stack up. Also, when taking out a personal lease, you pay for your car from your income or savings after paying taxes (unlike in salary sacrifice where you pay for it before paying taxes).

With an electric car scheme such as our EV salary sacrifice scheme, there’s only one additional cost you really need to consider:

• Charging costs

Yep, that’s right. In our EV salary sacrifice scheme, you get:

• A free home charger
• Insurance
• Servicing and maintenance
• Breakdown and tyres
• MOT

These are all included in your monthly payment. So, you save money on tax, and it’s less hassle - a win-win.

Wondering what the cost comparisons between personal leasing and salary sacrifice look like?

Let’s take a look.

These costings are based on Nimble fins insurance numbers, average car running costs in the UK, AA breakdown recovery costs, checkatrade tyres on the assumption that one set of tyres has been changed in the last 20k miles. It's also assumed that the owner of the vehicles is 40 years old and a 20% tax payer.

Here’s how the costs of the two cars stack up against each other:

• Monthly cost of the personal lease = £584. 67
• Monthly cost of the salary sacrifice = £385.90

Because our electric car salary sacrifice scheme is one all-inclusive price that covers everything you need to hit the road, this comparison gives drivers great savings, all while letting you switch to a brand new, top-spec electric car.

The decision between salary sacrifice and personal leasing depends on your circumstances and personal opinion. A salary sacrifice scheme may be the better choice if you prioritise cost savings. However, you may not be with an employer that offers salary sacrifice, in which case personal leasing might be your only choice.

If your employer doesn’t already offer an EV salary sacrifice scheme, we can help you convince your company.

It’s free for your employer to join, and you can choose from any of our EVs to take home as an employee benefit.