Salary Sacrifice Car Calculator UK 2025/26

In a salary sacrifice car scheme, you give up part of your gross salary in exchange for a car lease provided by your employer. Because your gross salary is reduced, you pay less income tax and National Insurance on it. You also pay Benefit in Kind (BiK) tax on the car based on its P11D value and CO2 emissions. For electric cars the BiK rate is just 3% in 2025/26, which makes the scheme highly tax efficient.

The Benefit in Kind (BiK) rate for fully electric cars (0g/km CO2) is 3% in 2025/26. It rises to 4% in 2026/27, 5% in 2027/28, and 7% in 2029/30. These rates are far lower than petrol or diesel cars (typically 25–37%), which is why electric car salary sacrifice schemes are so popular. If you are considering a 3-year lease, locking in now means you benefit from the lower rates for the full term.

The P11D value is the list price of the car including standard factory options, VAT, and delivery charges — but excluding the first year registration fee and vehicle excise duty (road tax). Your employer or the leasing company will show this on your car quote. It is used by HMRC to calculate your Benefit in Kind (BiK) tax. A lower P11D value means a lower BiK tax bill.

For most UK employees, yes. The combination of income tax and NI savings on the sacrificed amount, plus the low 3% BiK rate for EVs, typically reduces the effective monthly cost by 30–40% compared to a personal lease. A basic rate taxpayer saving on a £500/month EV lease might pay an effective cost of around £300–350/month after tax relief. The saving is even larger for higher rate taxpayers.

It can. If your pension contributions are based on your gross salary, reducing your salary through sacrifice may reduce the pensionable pay figure used for employer or employee contributions. Check with your HR or pension provider before starting the scheme. Some employers base pension contributions on the pre-sacrifice salary to protect employees — worth confirming.

If you leave your employer before the lease ends, you typically have three options: transfer the lease to your new employer (if they offer the scheme), take over the lease personally at the same or a revised rate, or terminate the lease early (which usually incurs an early termination fee). Check the early exit terms with your employer and leasing company before signing.

Yes, but the tax benefit is much smaller. Petrol and diesel cars typically have BiK rates of 25–37% depending on CO2 emissions. At these rates, the BiK tax often offsets most or all of the income tax and NI saving from the sacrifice, leaving little or no net benefit compared to a personal lease. This calculator shows the full breakdown for all car types so you can compare directly.

Your employer saves 15% Employer National Insurance on the amount you sacrifice. On a £500/month (£6,000/year) sacrifice, that is £900 per year saved by your employer. Many employers pass some or all of this saving back to employees, either by contributing to the lease cost or reducing the sacrifice amount. It is always worth asking your HR team whether the employer NI saving is shared.