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🇬🇧 UK-only · Updated for 2026/27 Tax Year

EV Salary Sacrifice Calculator

Calculate exactly how much you save on an electric car via salary sacrifice compared to a cash allowance. Incorporates the new 2026/27 4% BIK rate.

✓2026/27 4% BIK Rate✓Tax & NI Savings✓Cash Allowance Comparison✓Free — no sign-up

Vehicle & Sacrifice Details

Gross monthly cash if you don't take the car

Net Cost of EV

Gross Sacrifice (Lease):£600.00
Income Tax Saved:-£0.00
NI Saved:-£0.00
Company Car BIK Tax:+£0.00
True Net Cost (per month):£0.00

EV vs Cash Allowance

Net cost of taking EV
£0.00
VS
Net cash forfeited
£0.00

Taking the EV costs you £0.00 out of your pocket every month, which is less than the £0.00 in net cash you would receive from the allowance.

This means you are effectively being paid £0.00 a month to drive the EV compared to taking the cash.

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How Much Can You Save on an Electric Car Through Salary Sacrifice?

Salary sacrifice is the cheapest way to drive a brand new car in the UK. By agreeing to lower your gross salary by the cost of the lease, you completely avoid paying Income Tax and Employee National Insurance on that money. You can check your general take-home pay impact using our standard Salary Sacrifice Calculator.

However, because you are receiving a vehicle from your employer, HMRC treats it as a "Benefit-in-Kind" (BIK). This means you must pay a special company car tax. The brilliant loophole with Electric Vehicles is that the government has set the BIK rate for EVs incredibly low to encourage adoption.

How Is the BIK Tax Calculated on an Electric Car?

Unlike standard Income Tax, BIK tax is not calculated on the monthly lease cost of the car. It is calculated entirely on the P11D value (the list price) of the car when it was new.

  • First, you take the P11D value (e.g., £40,000) and multiply it by the EV BIK rate for the year (4% for 2026/27). This gives you the "BIK Value" (£1,600).
  • You then multiply that BIK Value by your highest Income Tax band (e.g., 40% for a higher rate taxpayer).
  • This means you will pay £640 a year in BIK tax, which works out to £53.33 a month.

If you are not using a salary sacrifice scheme and just want to calculate standard BIK tax, use our Company Car Tax Calculator.

EV BIK Roadmap 2026–2030 — Rates Will Rise

While the BIK rate for EVs is incredibly cheap, it is slowly rising. HMRC has published a roadmap detailing exactly what the rates will be over the next few years. If you sign a 3-year or 4-year lease today, your tax bill will slightly increase each April.

  • 2026/27: 4%
  • 2027/28: 5%
  • 2028/29: 7%
  • 2029/30: 9%

EV Salary Sacrifice vs Car Allowance — Which Is Better?

Many employers will offer you a choice: take the company car via salary sacrifice, OR take a monthly cash "Car Allowance" and source your own vehicle privately.

For an electric vehicle, salary sacrifice almost always wins. The cash car allowance is treated exactly like standard salary, meaning it is instantly taxed at your highest rate and subjected to National Insurance. A £500 monthly car allowance might only leave a higher-rate taxpayer with £290 in their pocket. By contrast, that same £500 put into a salary sacrifice scheme retains its full £500 buying power, easily absorbing the tiny 4% BIK tax hit.

Company Cars

Frequently asked questions

How much can I save on salary sacrifice for an electric car?
Depending on your tax bracket, you can save between 28% and 47% on the cost of the lease. A higher rate (40%) taxpayer saves 40% in Income Tax and 2% in National Insurance on the gross lease amount. You will, however, have to pay a small Benefit-in-Kind (BIK) tax.
What is the BIK rate for electric cars in 2026/27?
The Benefit-in-Kind (BIK) rate for fully electric vehicles (EVs) in the 2026/27 tax year is 4% of the car's P11D value. This is a 1% increase from the 2025/26 tax year.
Is electric car salary sacrifice worth it?
Yes, overwhelmingly so. Because the BIK rate on EVs is so incredibly low (4%) compared to petrol or diesel cars (which can easily exceed 30%), the massive savings on your Income Tax and National Insurance heavily outweigh the small BIK tax you have to pay.
How does EV salary sacrifice reduce my income tax AND National Insurance?
When you agree to a salary sacrifice, your employer deducts the lease cost from your gross salary before any tax is calculated. This effectively lowers your taxable income, meaning you do not pay Income Tax or Employee National Insurance on the amount you sacrificed.
What is the P11D value of an electric car?
The P11D value is the list price of the car, including VAT and delivery charges, plus any optional extras you have added. It does not include the first year's road tax (VED) or the first registration fee.
Are EV BIK rates going up after 2026?
Yes. HMRC has published a clear roadmap for EV BIK rates to slowly increase as the technology becomes mainstream. After 4% in 2026/27, the rate will rise to 5% in 2027/28, 7% in 2028/29, and 9% in 2029/30.
What happens to my EV if I leave my job?
If you leave your employer, you generally cannot take the salary sacrifice lease with you. Most scheme providers offer an 'early termination insurance' (often built into the monthly cost) to cover the penalties of handing the car back early, but you should check your specific contract.
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