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What are the benefits of car salary sacrifice?

Salary sacrifice schemes are usually arranged by a third-party provider. The employee can then choose which car they’d like, such as a lease on a brand new electric car. Salary sacrifice benefits both employees and employers. Read on to learn more about how and why.

Benefits of car salary sacrifice for employees

  • Tax savings - If you’re the employee, the most appealing benefit of salary sacrifice schemes is that you can avoid paying a significant amount of tax and National Insurance. This depends on how much you earn, with higher earners saving the most – especially if the reduction in salary means you move down from the higher rate of tax bracket.

  • Lower monthly payments - Another significant car salary sacrifice benefit is that you can lease a car for less than if you took out a personal lease. This is because business car leases aren’t subject to VAT, meaning you can save 20% on your agreement.

  • No deposit required - Most car salary sacrifice schemes allow you to lease a car without having to put down a deposit. As well as saving you a sizeable chunk of cash up front, this also means monthly payments are higher than if you put in a deposit. This in turn maximises your savings from the scheme.

  • Reduced fuel costs - Simply EVs are cheaper to run than petrol and diesel cars - especially if you can charge at home with a professionally installed home charger. This allows you to make savings on your daily running costs.

  • Access to wider choice of electric vehicles - It may be the case that you can choose from a wider range of cars through a salary sacrifice scheme. Lower monthly payments could open up more luxurious vehicles to your budget, while you may also benefit from fleet discounts if you work for a large company.

  • Wrap a home charger into your salary sacrifice - It isn't just an EV lease that can be part of our salary sacrifice scheme, you can also wrap in the cost of a home charger, meaning even bigger savings.

Popular EV salary sacrifice models

Depending on your needs the there's an EV for everyone - whether you're looking for a practical and roomy family-sized SUV or a sporty hot hatch, you'll find one with zero tailpipe emissions!

Volkswagen ID.3 Facelift 2023

Volkswagen ID.3

BMW ix3


Audi Q8 e-tron

Audi Q8 e-tron



Benefits of car salary sacrifice for employers

  • Lower National Insurance contributions - If you’re an employer asking yourself ‘what is the benefit of salary sacrifice?’, the most obvious advantage is that you can reduce your National Insurance contributions. This can be a significant saving, especially when you have numerous employees enrolled on a scheme.

  • Increased employee satisfaction - Benefit schemes can be incredibly popular among employees. Saving money on tax, driving a better, brand new car – what’s not to love?

  • Reduced employee turnover - With the higher levels of employee satisfaction comes reduced turnover of staff. As well as retaining your most talented assets, this also reduces recruitment and training costs.

  • Enhanced company image - Benefit schemes can make your company more attractive to potential new recruits. It can also boost your company’s reputation when you run a car salary sacrifice scheme on electric cars.

  • Reduced admin costs - You company can save on both time and money when you arrange your salary sacrifice scheme through a provider like DriveElectric. This is because we can not only source and deliver vehicles to your employees, but also help to organise servicing, maintenance and repairs.

Is salary sacrifice a taxable benefit?

Cars leased through salary sacrifice schemes are considered to be company cars for tax purposes. This means they’re subject to company car tax, also known as benefit-in-kind (BIK) tax. However, this tax is significantly less than the saving that can be made on tax and National Insurance, plus the other savings that are possible.

The UK Government has set out the BIK rate on electric cars for each year up to 2028. The current 23/24 tax year sees a BIK rate of 2%, which remains the same for 24/25. In 2025/26 the rate increases to 3%, then 4% in 26/27 and 5% in 2027/28. All rates which are significantly lower than hybrid, petrol and diesel car BIK rates.

cupra born electric car

Salary sacrifice comes with numerous benefits for both employers and employees. There are significant savings to make through schemes like DriveElectric’s car lease salary sacrifice scheme, putting you or your employees behind the wheel of the latest electric vehicles.

Contact us today to get the wheels spinning

Keen to drive your new electric vehicle salary sacrifice forward? Get in touch today and chat with our expert team about the next steps.