EV salary sacrifice calculator
An electric car through salary sacrifice is cheaper than the headline lease, because you avoid income tax and National Insurance on the sacrificed pay. But you add back a small Benefit-in-Kind tax. This shows the true monthly cost.
How the sum works
Three numbers decide the real cost. First, the sacrifice cuts your gross pay, so your take-home drops by less than the sacrifice because you no longer pay income tax and National Insurance on that slice. Second, an electric company car is a taxable benefit, charged on 4% of the P11D value at your marginal income tax rate. Third, the true monthly cost is the take-home drop plus that Benefit-in-Kind tax. The tool works all three from your own salary, so the marginal rate is correct even in the awkward bands.
Worked example
Take a £110,000 salary and a £600 a month sacrifice for a £45,000 electric car. The salary sits in the £100,000 to £125,140 band, so the marginal saving is about 62%: 40% higher-rate tax, the 20% Personal Allowance withdrawal, and 2% National Insurance. Your take-home falls by about £228 a month. The Benefit-in-Kind is £1,800 a year (4% of P11D), which costs £90 a month at that marginal rate. Add them and the car really costs about £318 a month, against a headline figure of £600.
Below £50,270 the saving is smaller, around 28%, because you only save basic-rate tax and 8% National Insurance. The scheme still works, but saves less.
Common questions
How does an EV salary sacrifice scheme save money?
You give up part of your gross salary in return for the car, so you pay no income tax and no employee National Insurance on the sacrificed amount. An electric car is still a Benefit-in-Kind, taxed at only 4% of the P11D value for 2026/27, so a little tax comes back. The net of those two is usually well below the headline lease price.
What is the Benefit-in-Kind tax on an electric car?
For 2026/27 an electric company car is taxed on 4% of its P11D value, at your income tax rate. On a £45,000 car that is a £1,800 benefit. The rate rises to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30, so later years cost more.
Why is salary sacrifice best between £100,000 and £125,140?
In that band every £1 of salary also withdraws 50p of Personal Allowance, so the marginal rate is 60% plus 2% National Insurance. Sacrificing salary there saves about 62%, and it can restore some Personal Allowance too. That is why higher earners in the taper band gain the most.
Do I still pay for the car if my take-home barely drops?
Yes. Your take-home falls by the sacrifice minus the tax and NI you no longer pay, and you also owe the small Benefit-in-Kind tax. The tool adds both together so the monthly figure is the real cost, not just the pay cut.
What happens if I leave my job?
Salary sacrifice car schemes are tied to your employment. If you leave, most schemes end the arrangement and you hand the car back, sometimes with an early-termination cost. Check the scheme rules before you commit, because this is the main risk with these deals.