Employee Car Benefit · Tax-Efficient EV Leasing

Salary Sacrifice — Drive Electric
for Significantly Less

Help your employees access a brand-new electric vehicle for far less than a personal lease. Payments come from gross salary before tax and National Insurance — saving employees money every month while reducing your employer NI bill too. VCEA sets up and manages the whole scheme.

Call 01733 836563 Set Up a Scheme
4%EV BiK Rate 2026/27
42%Max Employee Saving
15%Employer NI Reduction
£0Setup Cost to Employer

What is Salary Sacrifice?

Drive electric for less — by paying from gross salary before tax

A salary sacrifice car scheme lets employees give up part of their gross salary in exchange for a company car — almost always a fully electric vehicle. The monthly lease payment is deducted before income tax and National Insurance are calculated, so the effective cost is far lower than leasing personally with take-home pay.

The employer leases the vehicle and provides it as a company car benefit. The employee pays Benefit in Kind (BiK) tax on it. For fully electric cars in 2026/27, BiK is just 4% — meaning the BiK liability is tiny even on a premium model, and the overall saving is still very large.

VCEA manages the entire scheme on behalf of the employer: vehicle sourcing, finance, maintenance packages, documentation and ongoing administration — all at no direct setup cost to your business.

No employer setup fee 4% EV BiK 2026/27 Income tax saving Employee NI saving Employer NI saving All major EV brands

How it works — in brief

1
Employer registers with VCEAWe set up the scheme structure, policy and eligibility criteria at no direct cost.
2
Employees choose their EVChoose from the full EV market. Each employee receives a personalised savings illustration.
3
Salary sacrifice agreement signedEmployee reduces gross salary by the monthly lease amount for the term.
4
Vehicle delivered to their doorVCEA arranges delivery anywhere in the UK. No dealership visit needed.
5
Tax savings from month oneDeduction from gross salary each payroll. Employee pays only a small BiK tax charge.
6
Return or renew at end of termVehicle returned. Employee can choose a new EV and start the cycle again.

The Numbers

What does salary sacrifice actually save?

The example opposite shows a higher-rate taxpayer (40% income tax) sacrificing £550 per month for a £40,000 electric vehicle. The effective after-tax cost drops to around £359 per month — compared to over £550 on a personal lease for the same car.

Add in the 4% BiK rate for electric vehicles and the numbers remain highly attractive. A basic-rate taxpayer on the same car saves roughly £137 per month. A higher-rate taxpayer saves around £178 per month.

Every employee gets a personalised savings calculation before they commit. VCEA shows the exact gross sacrifice, tax and NI saved, BiK tax payable and net effective monthly cost — so there are no surprises.

* Illustrative only. Savings depend on salary, tax code, NI category and vehicle. Seek independent tax advice.

Example — Higher Rate Taxpayer · £40,000 EV

Monthly gross sacrifice£550
Income tax saved (40%)− £220
Employee NI saved (2%)− £11
BiK tax (4% on £40k P11D · higher rate)+ £53
Net effective monthly cost£372
Personal lease equivalent~£550+
Estimated monthly saving~£178

Estimated net cost to you after your salary sacrifice. The cost of salary sacrifice depends upon your own personal tax position and you should make your own investigations. Tax & NI rates may be subject to change at any time.

Both Sides Win

Benefits for employers and employees

Salary sacrifice is one of the few employee benefits where both parties gain financially — not just the employee.

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For Employers

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Reduce employer National InsuranceLower gross salaries reduce your NI bill at 15%. For 20 employees each sacrificing £500/month, that's ~£21,600 saved annually.
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Attract and retain talentAn EV salary sacrifice scheme is a high-visibility benefit that strengthens your Employee Value Proposition in a competitive hiring market.
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Support ESG and sustainability goalsFacilitating employee EV adoption directly contributes to your carbon reduction strategy and sustainability reporting.
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No direct setup costVCEA sets up and administers the scheme. NI savings typically offset or exceed any associated costs — many schemes are cost neutral or better.
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Demonstrate financial wellbeingProviding access to affordable new cars is a tangible, valued benefit that shows investment in your employees' day-to-day lives.
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Fully administered by VCEAScheme setup, documentation, employee onboarding, vehicle ordering, P11D support and end-of-term returns all handled end-to-end.
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For Employees

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Major income tax and NI savingsBasic-rate taxpayers save 28% on the sacrifice amount. Higher-rate taxpayers save 42%. Hundreds of pounds per month in most cases.
✓
Brand-new electric vehicleAccess the latest EV technology — improved range, fast charging, advanced safety systems and full manufacturer warranty included.
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One fixed monthly costServicing, maintenance, tyres and breakdown assistance bundled into one predictable figure. No surprise repair bills.
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No deposit requiredMany salary sacrifice schemes require little or no upfront payment — making it accessible without a large cash commitment.
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Lower fuel costs through home chargingOvernight home charging is typically far cheaper than petrol or diesel, especially on an off-peak electricity tariff.
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Clean Air Zone exemptionFully electric vehicles are currently exempt from UK Clean Air Zone and ULEZ charges — saving money on urban journeys.

HMRC Benefit in Kind Rates

Why electric vehicles make salary sacrifice so powerful

The Government has set exceptionally low BiK rates for fully electric vehicles through to 2027/28. This single factor is what makes EV salary sacrifice so effective compared to any other vehicle type.

Vehicle Type CO₂ Emissions BiK 2024/25 BiK 2025/26 BiK 2026/27 ★ Current BiK 2027/28
Fully Electric (BEV) 0g/km 2% 3% 4% 5%
Plug-in Hybrid (PHEV) 1–50g/km 5–8% 7–18% 8–19% 9–20%
Petrol / Mild Hybrid 100g/km 23% 24% 25% 26%
Petrol / Mild Hybrid 150g/km 33% 34% 35% 36%
Diesel 130g/km 32% 33% 34% 35%

Source: HMRC. PHEV rates increase from 2026/27 depending on zero-emission range. Rates are subject to change. Always verify against current HMRC guidance and seek professional tax advice.

Available Vehicles

Popular salary sacrifice electric vehicles

VCEA is independent — employees are not restricted to one manufacturer. They can choose from virtually any EV available in the UK market.

Tesla Model 3 (RWD & Long Range)4% BiK · Most popular choice
Tesla Model Y (RWD & Long Range)4% BiK · Practical family SUV
BMW i4 (eDrive35 & M50)4% BiK · Premium executive
Volkswagen ID.74% BiK · Long-range estate
Kia EV34% BiK · Compact SUV
Audi Q4 e-tron4% BiK · Premium SUV
Hyundai IONIQ 64% BiK · Ultra-efficient saloon
Peugeot e-208 & e-20084% BiK · Accessible EV
Skoda Enyaq iV4% BiK · Spacious family SUV
Vauxhall Astra Electric4% BiK · Practical hatch
Mercedes-Benz EQA & EQB4% BiK · Premium compact
Volvo EX30 & EC404% BiK · Scandinavian design

This is a selection. VCEA can source salary sacrifice agreements on virtually any fully electric vehicle in the UK. Contact us with any specific model in mind.

The Full Process

How VCEA sets up and runs your salary sacrifice scheme

From your first conversation with VCEA through to the first vehicle being driven away — here is exactly what happens at every stage.

1

Initial consultation — no commitment required

Contact VCEA to discuss setting up a scheme. We explain the structure, model the NI savings for your business, and assess whether a scheme is viable for your workforce. No obligation at this stage.

Free consultationNo obligationNI saving modelled
2

VCEA sets up the scheme

VCEA prepares the salary sacrifice policy, employee eligibility criteria and all documentation. We liaise directly with the finance provider and configure the scheme administration. No direct cost to the employer.

Policy documentNo setup feeFinance provider liaison
3

Employee communications and savings illustrations

VCEA provides employee-facing materials and personalised savings calculations. Every employee sees exactly what their chosen vehicle will cost per month — including income tax saved, NI saved, BiK tax payable and net effective cost.

Personalised calculationsClear before/after figures
4

Employee selects their EV

The employee chooses their preferred EV from the full market — VCEA is not restricted to any single brand. Finance approval is obtained from the provider.

All major EV brandsFinance approval
5

Salary sacrifice agreement signed

The employee signs a salary sacrifice addendum reducing their gross salary by the monthly lease amount. The employer signs the lease agreement with the finance provider as lessee.

6

Vehicle ordered and delivered to the door

VCEA orders the vehicle and coordinates delivery directly to the employee's home or workplace anywhere in the UK. No dealership visit required at any stage.

UK-wide deliveryNo dealership visit
7

Monthly deduction and P11D reporting

The monthly lease amount is deducted from gross salary via payroll each month. The employer reports the car on the employee's P11D each tax year. BiK tax is collected via PAYE automatically. VCEA supports with any administration queries throughout.

8

End of term — return, renew or exit

At the end of the lease term, the vehicle is collected and returned. The employee can select a new EV and restart the scheme, or exit the arrangement. VCEA manages the entire renewal process.

Vehicle collection arrangedEasy EV upgradeNo resale hassle

Who Can Offer a Scheme?

Which organisations can run salary sacrifice?

Most UK employers can implement a salary sacrifice car scheme. The main requirements are running a PAYE payroll and ensuring no employee's pay falls below the National Minimum Wage after sacrifice.

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Limited Companies

Any limited company can offer salary sacrifice. NI savings are most impactful for businesses with 10 or more eligible employees.

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Partnerships & LLPs

Partnerships and LLPs can run schemes for their employees. VCEA advises on partner and member eligibility separately.

❤️

Charities

Charities frequently use salary sacrifice to provide competitive employee benefits where salaries may be lower than the commercial sector.

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Public Sector

NHS trusts, councils, universities and other public sector bodies are among the most active users of salary sacrifice schemes in the UK.

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SMEs & Scale-ups

Growing businesses use salary sacrifice to compete for talent with larger employers by offering premium benefits at minimal cost.

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Any PAYE Employer

If you run a PAYE payroll and employees earn above minimum wage after sacrifice, you can very likely offer a salary sacrifice car scheme.

Why VCEA?

An independent partner who handles everything

We are not a software platform, a captive dealership or a finance company. We are an independent leasing consultancy managing your salary sacrifice scheme personally, from first conversation to final vehicle return.

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Genuinely independent

Not tied to any manufacturer or finance house. Employees choose from the full EV market. Employers get the best available terms — not a restricted panel.

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Dedicated account management

A named VCEA consultant manages your scheme from setup through to renewal. One point of contact for HR and for individual employees throughout.

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End-to-end administration

Scheme documentation, employee onboarding, vehicle ordering, delivery, P11D support and end-of-term returns all handled by VCEA.

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Nationwide delivery

Vehicles delivered directly to any employee's home or workplace across the UK. Employees never need to visit a dealership.

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EV expertise

We help every employee choose the right EV for their lifestyle — range, charging, practicality — so they genuinely love their vehicle.

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FCA authorised & BVRLA member

Full FCA compliance as a credit broker. Commission disclosed transparently. BVRLA membership means adherence to a mandatory code of conduct.

Questions Answered

Salary sacrifice car scheme — frequently asked questions

Everything employers and employees need to know — from tax savings and vehicle choice to what happens when an employee leaves.

A salary sacrifice car scheme is an arrangement where an employee gives up part of their gross salary in exchange for a company car — typically a fully electric vehicle. Because the monthly payment is deducted before income tax and National Insurance are calculated, the effective cost to the employee is significantly lower than leasing personally. The employer leases the vehicle and provides it as a benefit; the employee pays a small Benefit in Kind tax charge on it.
A basic-rate taxpayer (20% income tax) saves 20% tax plus 8% employee NI on the sacrifice amount — a 28% combined saving. A higher-rate taxpayer (40%) saves 40% tax plus 2% NI — a 42% saving. These are partially offset by BiK tax on the vehicle. With the current 4% EV BiK rate in 2026/27, net monthly savings are typically substantial — often £100 to £200 per month compared to a personal lease on the same car.
Yes. When an employee reduces their gross salary through salary sacrifice, the employer pays National Insurance on the lower figure. Employer NI is currently 15% in 2026/27. For a scheme with 20 employees each sacrificing £500 per month, the employer NI saving is approximately £1,800 per month — or £21,600 per year. For larger schemes these savings can be substantial and typically cover any scheme administration costs.
Electric vehicles attract a Benefit in Kind rate of just 4% in 2026/27, far below the 24–37% rates for typical petrol or diesel cars. BiK tax is the main offsetting cost in a salary sacrifice arrangement, so the lower the BiK rate, the more of the tax and NI savings the employee keeps. Petrol and diesel cars carry such high BiK rates that salary sacrifice savings are largely wiped out — making fully electric vehicles the only vehicle category where the arrangement delivers genuine financial benefit.
BiK tax applies when an employer provides a company car that is available for private use. It is calculated by multiplying the vehicle's P11D value by the BiK percentage rate, then applying the employee's income tax rate. For a fully electric car with a P11D value of £40,000 at the 2026/27 BiK rate of 4%, the annual BiK value is £1,600. A basic-rate taxpayer pays £320 per year (£27 per month). A higher-rate taxpayer pays £640 per year (£53 per month). This remains far less than the income tax and NI saved through the salary sacrifice arrangement.
If an employee leaves before the lease ends, the employer typically becomes liable for the remaining payments. VCEA advises employers on how to manage this risk through the salary sacrifice policy — including clauses that can transfer remaining liability to the departing employee, or early termination insurance to cover this exposure. We model this risk as part of the scheme setup process.
Yes. Salary sacrifice reduces gross salary, which can affect mortgage affordability assessments and salary-related state benefits including maternity pay and statutory sick pay. VCEA strongly recommends all employees seek independent financial advice before entering into a salary sacrifice arrangement, particularly if they are planning a mortgage application in the near future.
Yes. Salary sacrifice cars are treated as company cars by HMRC and must be reported on the employee's P11D form each tax year. The employer reports the vehicle's P11D value, CO2 emissions and fuel type. The resulting BiK tax is then collected through the employee's PAYE tax code automatically each month — no separate annual payment is required.
VCEA is independent and not tied to any single manufacturer. Employees can choose from virtually the full range of fully electric vehicles available in the UK. Popular choices include Tesla Model 3 and Y, BMW i4, Volkswagen ID.7, Kia EV3, Audi Q4 e-tron, Hyundai IONIQ 6, Peugeot e-208, Skoda Enyaq iV, Vauxhall Astra Electric, Volvo EX30 and many more. If you have a specific model in mind, contact VCEA and we will confirm availability and provide a savings illustration.
Minimum employee numbers vary by finance provider. Some funders will consider schemes for businesses with as few as 10 to 15 eligible employees, while others require more. VCEA assesses your workforce at the outset and identifies the most suitable providers based on your organisation's size and structure.
Salary sacrifice agreements typically mirror the underlying vehicle lease, running for 24, 36 or 48 months. The most common choice is 36 months. At the end of the agreement, the vehicle is collected and returned. The employee can then choose a new electric vehicle and continue in the scheme, or exit the arrangement.
There is no direct setup fee charged by VCEA to the employer. VCEA is remunerated through a commission arrangement with the finance provider, which is disclosed to all parties in line with FCA requirements. Any scheme administration costs are explained transparently before you commit, giving you full visibility of the financial model from the outset.

Ready to set up your salary sacrifice scheme?

Whether you are an employer wanting to implement a scheme or an employee curious what you could save, VCEA is ready to help. No setup fee. No obligation. Expert, independent advice.

Call 01733 836563 Get a Scheme Quote