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Vehicles & Transport · BIK 3% (2025/26)

EV Salary Sacrifice Calculator

Electric cars through salary sacrifice can cost half what you’d pay leasing privately — because you swap gross pay (taxed) for a lease (untaxed bar a small BIK).

Your scheme

£
£

Manufacturer list price including options and VAT.

%

EV BIK: 3% in 2025/26 → 9% by 2029/30.

Net monthly cost

£393

vs £600 privately — saves £2,484/yr

Annual cost breakdown

  • Gross annual lease
    £7,200
  • Income Tax + NI saving (42%)
    −£3,024
  • BIK tax on car (P11D × 3% × IT rate)
    £540
  • Net annual cost
    £4,716

How we calculated your result

Salary sacrifice EV schemes work by reducing your gross salary by the monthly lease amount. The mechanics:

  1. You save Income Tax + employee NI on the sacrificed amount (~28% for basic rate, ~42% for higher rate).
  2. You pay Benefit-in-Kind tax on the car — P11D × BIK rate × your Income Tax rate. For 2025/26 the BIK rate for EVs is just 3%.
  3. Net cost = gross lease − tax saving + BIK tax.

Most schemes (Octopus, Tusker, LoveElectric etc.) bundle in insurance, servicing, breakdown and tyres — so the true like-for-like comparison vs renting a car privately is normally even more favourable than this number suggests.

Official UK rules in simple English

HMRC’s rules for EV salary sacrifice:

  • BIK rate for pure EVs: 2% (2024/25), 3% (2025/26), 4% (2026/27), 5% (2027/28), 7% (2028/29), 9% (2029/30).
  • OpRA (Optional Remuneration Arrangements): most company-car benefits lost their tax break in 2017, but ULEVs (≤75g/km CO2) were specifically exempted — which is why EV sal sac still works.
  • Minimum Wage check: your post-sacrifice salary can’t take you below National Minimum Wage.
  • Lease length: typically 36–48 months, with mileage allowance built in.

Common pitfalls to watch out for

  • ⚠ Sacrificing salary affects pension and mortgage

    Your gross salary drops on paper, which can reduce auto-enrolment pension contributions and what mortgage lenders will offer. Many schemes use ‘notional’ salary for benefits — check the employer’s policy.

  • ⚠ Early termination charges can sting

    Leaving the job or being made redundant usually triggers an early-termination fee — often the remaining months of lease, or a fixed sum. Some schemes offer protection insurance, often worth taking.

  • ⚠ BIK is rising every year

    The 2% rate that hooked everyone in 2024/25 is gone. By 2029/30 it’s 9% — still much better than a petrol car’s 30%+ BIK, but the gap narrows. Lock in 3-year leases now to fix the rate.

  • ⚠ Not all employers offer schemes

    EV sal sac requires the employer to set up an arrangement with a provider. Many SMEs don’t bother. If yours doesn’t, you can ask — but it can take months to roll out.

Frequently asked questions

Can I sacrifice down to National Minimum Wage?
No. The post-sacrifice gross salary must remain at or above NMW for your hours. Higher earners aren’t affected; this mainly blocks part-timers and lower-paid full-timers from the most expensive cars.
What about hybrids?
Plug-in hybrids (PHEVs) have BIK rates based on electric range — 8–14% for cars with 30–69 mile range. Much less attractive than pure EVs. Mild hybrids (no plug) are treated as petrols.
Can I keep the car at end of lease?
Usually not directly — but most schemes let you buy at fair market value at the end. Some employers run novated leases that work differently. Check the small print.

Estimate only. Real schemes vary in what they bundle (insurance, tyres, charging credits). Always ask for a full quote in writing.

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