How salary sacrifice works
You agree to give up part of your gross salary in exchange for the car. Because that slice of salary is never paid to you, you do not pay income tax or employee National Insurance on it:
- Tax saved = lease cost x your marginal income tax rate
- NI saved = lease cost x your employee NI rate
In return, HMRC treats the car as a benefit in kind. For electric cars the charge is deliberately tiny:
- Monthly BIK tax = P11D value x BIK percentage x your tax rate / 12
The net cost is the lease minus the tax and NI saved, plus the BIK charge. For most tax payers that lands 30 to 45 percent below the sticker price of the lease.
The BIK rates are locked in until 2030
HMRC has published the benefit in kind percentages for zero emission cars all the way to the 2029/30 tax year, and they are built into this calculator:
- 2025/26: 3%, 2026/27: 4%, 2027/28: 5%, 2028/29: 7%, 2029/30: 9%
Even at 9 percent, an electric company car remains far cheaper in tax than any petrol or diesel equivalent, which typically sits at 25 to 37 percent.
Higher rate tax payers save the most, because the sacrificed salary would otherwise have been taxed at 40 percent or more.
Assumptions and accuracy
Uses published HMRC BIK percentages for zero emission cars to 2029/30 and 2026/27 income tax and employee NI rates for England, Wales and Northern Ireland. Scottish income tax bands differ slightly. Pension, minimum wage and scheme fees are not modelled.
These figures are estimates, not a guarantee. Last updated 2026-07-18.