How much can employees save with EV salary sacrifice?

Savings depend on the vehicle selected and the employee’s tax and National Insurance position. Employees can save through reduced Income Tax and National Insurance, potential VAT efficiencies where the employer reclaims VAT and reflects this in lower rentals, and low Benefit-in-Kind (BiK) tax rates for EVs.

How much can employers save with EV salary sacrifice?

Employers can benefit from 15% Employer National Insurance savings on the sacrificed salary, potential VAT reclaim on lease and maintenance costs, and corporation tax relief on business lease payments. For example, a £700 monthly sacrifice can generate approximately £105 per month (£1,260 per year) in Employer NI savings per employee.

What happens if an employee leaves mid-contract?

If an employee leaves or is dismissed before the end of the contract term they may be required to return the vehicle and pay termination fees, typically deducted from final salary by the employer. Early termination terms may include payments such as 50% of remaining rentals during early months, and later the lower of three monthly rentals or the early termination payment, depending on timing and circumstances.

EV Salary Sacrifice Explained

Q: What is EV salary sacrifice?

A salary sacrifice scheme enables employees to acquire a brand new, insured lease vehicle that is fully maintained. Employees pay via a reduction in gross salary and the vehicle is treated as a company car for tax purposes.

Q: How does an EV salary sacrifice scheme work?

Employees exchange part of their annual salary for a car and added services before it is taxed, reducing Income Tax and National Insurance. The employer sources the vehicle via Lease Electric and deducts the full cost from the employee’s salary. The car is treated as a company car for tax purposes.

Q: What is included with EV salary sacrifice?

Lease Electric’s scheme includes servicing and maintenance, unlimited tyre replacements and repairs (subject to a fair play policy), fully comprehensive insurance for the contract period with two additional named drivers, road tax at the prevailing rate, and roadside breakdown and recovery. Home charge points and standard installation from Pod Point can also be included.

Q: Who is eligible for EV salary sacrifice?

Employees must have completed at least 6 months of employment and passed probation. Salary sacrifice cannot take employees below National Minimum Wage. Participants must also meet insurance eligibility criteria.

Q: Can we provide salary sacrifice as well as company cars?

Yes. EV salary sacrifice is designed to complement, not replace, company cars. It can be offered alongside existing company car schemes as part of a wider employee benefits strategy.

Q: How do I register my business for EV salary sacrifice?

To provide EV salary sacrifice from Lease Electric, complete the online Business Sign Up and Business Finance Application, or book a call with the Lease Electric team. Once the application is complete, it will be reviewed and a team member will get in touch to discuss options and support.

What is EV Salary Sacrifice?

A salary sacrifice scheme enables your employees to acquire a brand new, insured lease vehicle, that is fully maintained – all they have to do is charge the vehicle.

How does an EV Salary Sacrifice Scheme Work?

An employee saves money by exchanging part of their annual salary for a car and added services before it is taxed, thereby reducing the amount of tax and national insurance they pay. The employee will get a brand new fully maintained and insured vehicle, cheaper than they could otherwise obtain. The car will be treated as a company car for tax purposes.

The employer sources the employee’s desired vehicle(s) via Lease Electric and provides it to the employee as well as deducting the full cost from the employee’s salary. The employer will benefit from reduced National Insurance Contributions (NICs) and corporation tax relief. The car will be treated as a company car for tax purposes.

Lease Electric provide the employer with access to the funders who can provide brand-new insured lease vehicles for the purpose of a salary sacrifice scheme. Through Verified Carbon Standard and Gold Standard projects, Lease Electric will offset the carbon produced in the making of each vehicle.

Salary Sacrifice Step-By-Step Guide

What is included with EV Salary Sacrifice?

Lease Electric's salary sacrifice scheme is extremely comprehensive and includes the following for the life of the contract;

All servicing and maintenance costs.
The cost of unlimited tyre replacements and repair.*
Fixed cost, fully comprehensive motor insurance for the Contract period with two extra named drivers allowed.
Road tax for your vehicle for the term of your contract (at the prevailing rate).
Full vehicle roadside breakdown and recovery service.

You just have to add electricity and/or Fuel - Home Charge Points and Standard Installation, from our Partners Pod Point, can also be included with Salary Sacrifice.

* We have a Fair Play policy on tyres. This means that damaged tyres will be replaced inside the maintenance budget. Replacements in the event of abuse, neglect, theft or vandalism will be recharged.The maintenance scheme does not cover driver abuse, damage or replacement as a result of neglect. These charges will be billed via a vehicle services invoice.

What are the Benefits of a Salary Sacrifice Scheme?

Due to the favourable Benefit-in-Kind rates for electric and plug-in hybrid company cars, a salary sacrifice scheme is the most cost-effective way to drive a brand-new electric car. Although the benefits don't stop at low company car tax, there are a plethora of benefits for both the employee and the employer.

Employee Benefits	Employer Benefits
The most cost-effective way to drive a brand-new electric car In addition to the employers fleet discounts and VAT savings, the employee will reduce the amount of Income Tax and National Insurance they pay.	Employee Retention & Recruitment An employee benefit allowing staff access to a brand new car with everything included at a fixed cost for the contract period.
All servicing, insurance and road tax costs covered Maintenance, servicing, insurance, road tax, accident management, tyres and breakdown cover are all included, the employee just adds electricity or fuel.	Reduced Carbon Footprint Encourages low-emission motoring due to financial and tax benefits of electric and plug-in hybrid vehicles, plus Lease Electric will offset the carbon produced in the making of each vehicle.
No Credit Check Due to the payment for the vehicle being made via the employee’s salary they do not need to pass any credit checks.	National Insurance Savings The reduction in the employee’s salary decreases the National Insurance Contribution (NIC) made by the company.
Insurance for additional drivers Add two additional named drivers to your EV Salary Sacrifice	Corporation Tax Savings Electric vehicles qualify for 100% of the rental to be offset against corporation tax.
Brand new car every 2, 3 or 4 years With no deposits or an old vehicle to sell, the employee can change their car every 2, 3 or 4 years with ease.	Lower Grey Fleet Risk Meet legal obligations to ensure that an employee’s vehicle is reasonably safe to use, fit for purpose and lawfully on the road.

Employee Benefits

Employer Benefits

The most cost-effective way to drive a brand-new electric car

In addition to the employers fleet discounts and VAT savings, the employee will reduce the amount of Income Tax and National Insurance they pay.

Employee Retention & Recruitment

An employee benefit allowing staff access to a brand new car with everything included at a fixed cost for the contract period.

All servicing, insurance and road tax costs covered

Maintenance, servicing, insurance, road tax, accident management, tyres and breakdown cover are all included, the employee just adds electricity or fuel.

Reduced Carbon Footprint

Encourages low-emission motoring due to financial and tax benefits of electric and plug-in hybrid vehicles, plus Lease Electric will offset the carbon produced in the making of each vehicle.

No Credit Check

Due to the payment for the vehicle being made via the employee’s salary they do not need to pass any credit checks.

National Insurance Savings

The reduction in the employee’s salary decreases the National Insurance Contribution (NIC) made by the company.

Insurance for additional drivers

Add two additional named drivers to your EV Salary Sacrifice

Corporation Tax Savings

Electric vehicles qualify for 100% of the rental to be offset against corporation tax.

Brand new car every 2, 3 or 4 years

With no deposits or an old vehicle to sell, the employee can change their car every 2, 3 or 4 years with ease.

Lower Grey Fleet Risk

Meet legal obligations to ensure that an employee’s vehicle is reasonably safe to use, fit for purpose and lawfully on the road.

How much can we Save with EV Salary Sacrifice?

EV salary sacrifice creates savings for both employees and employers. The exact amount depends on salary level, vehicle choice and tax position but for many organisations and employees, the financial benefits are significant.

Employees

Depending on the vehicle selected, their personal tax and National insurance position, employees can save through:

Income Tax reductions
National Insurance (NI) savings
Potential VAT efficiencies (where the employer reclaims VAT and reflects this in lower monthly rentals)
Low Benefit-in-Kind (BiK) tax rates for EVs

Example:

FORD CAPRI 210kW Premium 77kWh 5dr Auto
	20% Tax Payer	40% Tax Payer
Monthly Costs (Gross Salary Sacrifice)	£587.92	£587.92
Income Tax Saving	-£117.58	-£235.17
National Insurance Saving	-£47.03	-£11.76
Company Car Tax (2026/27)	+£27.51	+£55.01
Net Monthly Salary Reduction	£450.81	£396.01
Monthly Savings	£137.11	£191.91

Figures based on 4 year insured lease, 10,000 miles per annum including all maintenance, servicing, tyres, breakdown and fully comprehensive insurance. Company car tax based on delivery from March 2026. Saving calculation based on Class 1 National Insurance reduction from lower employee salary and increase in Class 1A National Insurance due to taxable benefit.

Employers

Employers can benefit from 15% Employer National Insurance savings on the sacrificed salary, potential VAT reclaim on lease and maintenance costs, and standard corporation tax relief on business lease payments.

Example:

If an employee sacrifices £700 per month:

Employer NI saving at 15%

£700 × 15% = £105 per month

Annual saving:
£105 × 12 = £1,260 per employee per year

Who is Eligible for EV Salary Sacrifice?

All we ask is that employees must have completed at least 6 months of employment and passed their probation to qualify. They must also consider whether they are going to remain in your employment during the contract to avoid early termination charges.

If your staff are given a cash allowance, all of the allowances can go towards payment of the vehicle using this scheme, unlike personal finance where the payment is subject to tax and NI deductions.

The overall amount salary sacrificed can not take Employees below National Minimum Wage, read 'What Salary Do you Need to Join an EV Salary Sacrifice Scheme' to find out more.

All participants must meet the insurance eligibility criteria. Insurance is a critical component of the scheme, and failure to meet these criteria may affect your ability to participate.

Employer Risk Mitigation

Should an employee leave the business mid-contract for any number of reasons, we offer solutions to minimise the financial risk to the employer.

Early Termination

If the employee voluntarily leaves employment or is dismissed before the end of the vehicle contract term they will be required to return the vehicle and pay the termination fees. The termination fee and any other amounts will be deducted from the employee’s final salary by the employer.

If the hire of the Vehicle is terminated during the first 3 months of the term, the Employee will pay an Early Termination Payment (equal to 50% of the remaining rentals), thereafter, the Employee shall pay the lower of the amount that is equal to 3 monthly rentals or the Early Termination Payment.

Lifestyle Provisions
The minimum contract term is as stated on the Vehicle Order Form. If the Employee leaves employment before the end of this term for the following reasons, the Employee will be required to return the Vehicle to the Funder and pay the associated termination fees. Career Break Dismissal Resignation Retirement Redundancy (unless otherwise advised) Reduction in Contracted Hours International Secondment / Transfer Loss of Licence (other than to ill health)	For absence due to any one of the following, the hire of the Vehicle will be terminated, and the Employee shall return the Vehicle, and there shall be no costs associated with the early termination of the Vehicle. Loss of licence due to medical reasons or death Long term sickness (unable to work)
For absence due to parental leave, the Employee can either terminate the hire of the Vehicle prior to the expiry of the term or continue to hire the Vehicle provided that the payments do not take them below the National Minimum Wage or National Living Wage. If the hire of the Vehicle is terminated during the first 6 months of the term, the Employee will pay an Early Termination Payment (equal to 50% of the remaining rentals). If the hire of the Vehicle is terminated after the first 6 months of the term, the Employee shall pay the lower of the amount that is equal to 3 monthly rentals or the Early Termination Payment. If the Employee continues to hire the Vehicle, the salary sacrifice deductions will continue until such time as would reduce the Employee’s pay below the National Minimum Wage, after which the sacrifice deductions for the Vehicle and Maintence element of this salary sacrifice will be suspended for a maximum of 12 months, or until the end of the term, the Insurance element will continue to be deducted monthly. Insurance is fixed for the contract term,unless changes are made, and the monthly amount will be highlighted during the ordering process.

Lifestyle Provisions

The minimum contract term is as stated on the Vehicle Order Form. If the Employee leaves employment before the end of this term for the following reasons, the Employee will be required to return the Vehicle to the Funder and pay the associated termination fees.

Career Break
Dismissal
Resignation
Retirement
Redundancy (unless otherwise advised)
Reduction in Contracted Hours
International Secondment / Transfer
Loss of Licence (other than to ill health)

For absence due to any one of the following, the hire of the Vehicle will be terminated, and the Employee shall return the Vehicle, and there shall be no costs associated with the early termination of the Vehicle.

Loss of licence due to medical reasons or death
Long term sickness (unable to work)

For absence due to parental leave, the Employee can either terminate the hire of the Vehicle prior to the expiry of the term or continue to hire the Vehicle provided that the payments do not take them below the National Minimum Wage or National Living Wage.

If the hire of the Vehicle is terminated during the first 6 months of the term, the Employee will pay an Early Termination Payment (equal to 50% of the remaining rentals).

If the hire of the Vehicle is terminated after the first 6 months of the term, the Employee shall pay the lower of the amount that is equal to 3 monthly rentals or the Early Termination Payment.

If the Employee continues to hire the Vehicle, the salary sacrifice deductions will continue until such time as would reduce the Employee’s pay below the National Minimum Wage, after which the sacrifice deductions for the Vehicle and Maintence element of this salary sacrifice will be suspended for a maximum of 12 months, or until the end of the term, the Insurance element will continue to be deducted monthly. Insurance is fixed for the contract term,unless changes are made, and the monthly amount will be highlighted during the ordering process.

Can we provide Salary Sacrifice as well as Company Cars?

Yes. EV Salary Sacrifice is designed to complement, not replace, company cars.

It can be offered to employees who do not receive a company car, those who take a car allowance, or employees looking for a cost-effective personal vehicle.

Many businesses now offer EV Salary Sacrifice alongside their existing company car schemes as part of a wider employee benefits strategy.

How to register my business to provide EV Salary Sacrifice?

To provide your Employees with EV Salary Sacrifice from Lease Electric, complete our online Business Sign Up and Business Finance Application, or Book a call with the Lease Electric Team to begin.

Once your application has been completed, we will review you application. A member of our team will reach out to discuss your salary sacrifice scheme, the support we can give you and the options available to your team.

EV Salary Sacrifice Frequently Asked Questions

To help answer any questions you may have about our EV Salary Sacrifice scheme, we’ve compiled answers to over 60 frequently asked questions, organised into the categories below:

The Scheme And How It Works

Eligibility on Pay and Benefits

Ordering A Vehicle

After My New Car is Delivered

From “What does EV Salary Sacrifice include?”, “What will be the net cost to me?”, “What is the effect on the State Pension?” and “Does EV Salary Sacrifice impact state benefits?”, to “What makes and models are available?”, “What happens if I need new tyres?”, “What is included with the insurance?” and “What happens at the end of the contract?” all the answers are in our FAQ guide.

EV Guides

Our Blog features over 250 posts designed to answer your FAQs and provide practical guidance, tips and insights on all things electric.

Whether you’re choosing your first EV, exploring home and public charging options, understanding tax benefits, incentives and regulatory changes, or looking for the latest model reviews, we’ve got you covered. We also tackle common EV myths, share helpful Top 10 lists such as EVs Under £40k, Best 7-Seater EVs, and EVs Suitable for Towing and provide updates on industry news, including topics like the most popular car colours and energy price caps and their impact on home charging costs.

Content is organised into nine easy-to-navigate categories: