Your guide to electric car salary sacrifice

Salary sacrifice schemes can be one of the most cost-effective ways to drive an electric car.


What is electric car salary sacrifice?

An electric vehicle salary sacrifice scheme lets an employee pay for an electric car each month using their gross salary – that’s before tax and other contributions are deducted. It’s the same as other salary sacrifice schemes, such as childcare, cycle to work schemes or pension contributions.

Unlike some other benefits that you might take through salary sacrifice, an electric vehicle isn’t taxed based on the salary that you give up: instead you pay tax on the value of the benefit in kind (BIK) tax. BIK is the value of the benefit you receive – in this case, a car. It’s what has helped make salary sacrifice the cheapest way to own an electric car. For battery-electric cars, BIK tax is 1% for 2021/22, and 2% for 2022/23.

How electric car salary sacrifice schemes work

A salary sacrifice car is a company car. Your company rents the car from a supplier, such as LeasePlan, and you rent it from your employer. You pay for the car using your gross pay, and your income tax is based on your remaining salary and the BIK value. Essentially, the same as what you’d pay anyway, but with a new, clean car for a cheaper cost.

What rules affect salary sacrifice?

OpRA stands for Optional Remuneration Arrangements – and it relates to legislation that was introduced in April 2017 to counter tax and national insurance avoidance on certain types of cash benefits. It changed the way some company cars were taxed - fortunately, it doesn’t affect electric cars on salary sacrifice. You can find out more about the legislation in our Funding and Tax Guide, produced in association with Deloitte.


What is Salary Sacrifice for cars, and why would you offer it to your employees?

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What’s included with electric car salary sacrifice

There are no deposits or credit checks for salary sacrifice, and your monthly payment includes:

If your company uses LeasePlan’s SalaryPlan salary sacrifice scheme, you can choose an electric vehicle from an approved list every two to three years. At the end of the contract, you can exchange the electric car for a new one, buy it, or simply hand it back*.

*Subject to excess mileage and fair wear and tear charges

What do you need to pay for?

When it comes to electric vehicle salary sacrifice as an employee there are just three things you need to pay for.


This is the cost of the car. Your employer cannot charge you more than it costs them to rent from the leaser. The cost of the rental is deducted from your gross pay.


For an electric car, you just need to pay for the cost of the electricity required to charge your car. This generally works out at around £2 to £4 per charge on a car with a 250-mile range.


Benefit in Kind tax (BIK) is 1% for 2021/22, and 2% for 2022/23.

Can I buy an electric car on salary sacrifice?

    For employees
    For employers

How does a salary sacrifice car scheme work?


    If you want to drive an electric car and your employer offers a salary sacrifice scheme, there are no specific drawbacks.

Is electric car salary sacrifice worth it?

If you want to drive a new electric car, yes.

Caroline Sandall, a specialist fleet consultant, says: “We’re not just talking about pure affordability, but being able to access vehicles that [employees] otherwise could not afford if they were dealing on a purely retail basis”.

What can you do next?

If you’re an employee interested in salary sacrifice – speak to your employer and put them in touch with us. Our consultancy team would love to help. If you’re a business owner, HR manager or fleet manager – get in touch:

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