Salary Sacrifice EV Scheme Calculator

How do salary sacrifice EV schemes work?

You agree to give up ("sacrifice") part of your gross salary in exchange for your employer providing an electric car, usually through a lease. Because the sacrifice comes out of your pay before income tax and National Insurance are worked out, you don't pay tax or NI on that portion. That is where the saving comes from.

You still pay Benefit-in-Kind (BIK) tax on the car, as a company car driver would. Electric cars sit on very low BIK percentages (see our Company Car Tax Calculator for the exact figures), so that tax is usually small compared with the income tax and NI you save on the sacrificed pay.

3 worked examples (2026/27)

Example 1 — Higher-rate taxpayer, mid-range EV

£500/month gross sacrifice, £35,000 P11D EV, higher-rate taxpayer (40%), 2% NI rate, 2026/27 tax year (4% EV BIK rate).

Example 2 — Basic-rate taxpayer, more affordable EV

£400/month gross sacrifice, £28,000 P11D EV, basic-rate taxpayer (20%), 8% NI rate, 2026/27 tax year.

Example 3 — Same sacrifice, more expensive EV

Same £500 sacrifice and 40%/2% tax position as Example 1, but a £55,000 P11D EV instead of £35,000.

Why EVs get the big saving

Salary sacrifice used to be popular for a much wider range of benefits. HMRC's Optional Remuneration Arrangement (OpRA) rules, which started on 6 April 2017, removed most of the tax advantage for benefits provided through salary sacrifice.

Cars with CO2 emissions of 75g/km or less are excluded from those rules, according to HMRC's manual. They are still taxed on the cash equivalent of the benefit, so the employer doesn't have to compare it with the salary given up. That is why salary sacrifice car schemes today are mostly electric. This calculator covers fully electric cars only.

What it saves your employer

Separately from your own saving, your employer also avoids paying Class 1 National Insurance on the sacrificed pay. GOV.UK gives the employer rate for 2026/27 as 15% on earnings above the secondary threshold (£417 a month). This is part of why many employers are willing to run these schemes.

The real downsides to know before joining

Salary sacrifice schemes are usually presented as a saving, but there are trade-offs worth understanding first:

• Your official salary is reduced for the duration of the sacrifice, which can affect mortgage affordability assessments, other salary-linked benefits, and life insurance based on a multiple of salary
• Pension contributions may be affected if yours are calculated as a percentage of salary. A lower salary can mean lower contributions unless your scheme protects them, so check with HR
• Statutory pay can be affected. Maternity, paternity and sick pay are sometimes calculated on your reduced salary, depending on the rules
• You usually can't simply cancel mid-agreement. Leaving your job or exiting early is normally only possible under conditions set by the scheme provider
• National Minimum Wage floor. A sacrifice generally can't take your pay below the National Minimum Wage, which can limit how much lower earners can sacrifice

What this calculator can't tell you

Your exact scheme's terms

Schemes vary. Some include insurance, maintenance and charging costs in the sacrifice, while others don't. This calculator handles only the tax and NI mechanics, not what your quoted lease figure includes.

Where your pay crosses a National Insurance threshold

The NI relief uses a single rate (8% or 2%) that you pick. If your sacrifice takes pay across the £4,189 a month upper earnings limit, part of it is relieved at each rate, so the real figure sits between the two.

The effect on your pension

If your pension contribution is a percentage of salary, a reduced salary could mean a smaller contribution over time. This calculator doesn't model that, so check with your scheme or HR department.

Mortgage or benefit affordability impact

A reduced official salary can affect mortgage applications and other income-based assessments during the sacrifice period.

Common mistakes

Only looking at the headline saving

Marketing for these schemes can lead with the tax and NI relief without clearly showing the BIK tax. Always check the net figure.

Not checking the pension impact

If your employer calculates pension contributions on your post-sacrifice salary rather than your original salary, you could be reducing your retirement savings for the sake of a monthly car saving.

Assuming the same saving applies to non-electric cars

The OpRA exclusion covers cars at 75g/km or less. For higher-emission cars the tax advantage has largely gone, so check the actual numbers rather than assuming the same saving applies.

Assuming the scheme is free to exit early

Leaving before the agreed term, whether through changing jobs or changing your mind, is usually restricted or costly. Understand the exit terms before signing.

Before you join a scheme

• Ask HR whether pension contributions are protected during the sacrifice period
• Get the exact P11D value of the car and trim you're considering, since BIK tax depends on it
• Check what's included in the quoted lease figure: insurance, maintenance and charging vary by scheme
• Understand the exit terms if you change jobs or circumstances change
• Consider the mortgage angle if you're planning a house move or major credit application during the agreement

How we calculate

Income tax relief = gross sacrifice × your income tax rate. NI relief = gross sacrifice × your selected NI rate.

BIK monthly tax = (P11D value × EV BIK % for the tax year ÷ 12) × your income tax rate, using the same zero-emission percentages as our Company Car Tax Calculator (3% for 2025/26, 4% for 2026/27, 5% for 2027/28).

Net monthly cost = gross sacrifice − income tax relief − NI relief + BIK tax owed. Monthly saving = gross sacrifice − net monthly cost.

Employer NIC saving (shown for context) = gross sacrifice × 15%.

Frequently asked questions

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