Salary Sacrifice Car Calculator

Usually a substantial amount, because fully electric cars only attract a 4% Benefit-in-Kind rate for 2026/27, applied to the car's P11D value, rather than being taxed on the salary you actually sacrifice. On a typical family EV, the tax bill on that low Benefit-in-Kind figure is often far less than the Income Tax and National Insurance you'd otherwise pay on the same amount of salary, which is why electric car salary sacrifice schemes have become popular with both employees and employers. Enter your own numbers in the calculator above for an exact figure.

Because of the optional remuneration arrangement (OpRA) rules introduced in 2017. For any car with CO2 emissions above 75g/km, you're taxed on whichever is higher: the salary you sacrifice, or the car's normal Benefit-in-Kind value. Since Benefit-in-Kind rates for higher-emission cars can reach up to 37% of the P11D value, this comparison usually means you end up taxed as if you'd simply been paid the salary and bought the car yourself, removing the tax advantage. Ultra-low-emission cars (75g/km or below, including all electric cars) are exempt from this comparison, which is why the saving is concentrated there.

It's the Income Tax charged on the value of a car your employer provides for private use. HMRC calculates a taxable amount each year by multiplying the car's P11D value by an "appropriate percentage" that depends on its CO2 emissions (and, for plug-in hybrids, its electric range), then adds that figure to your taxable income. Unlike salary, it isn't liable for employee National Insurance, your employer pays a separate Class 1A National Insurance charge on it instead.

It's the car's list price, including VAT, delivery charges and any factory-fitted options, but excluding the first year's Vehicle Excise Duty and the vehicle registration fee. It's usually higher than what you'd actually pay after any discount, and it's fixed for the life of the car regardless of any negotiated price, mileage, or age. Your leasing company or employer's scheme provider will normally give you this figure directly.

You pay employee National Insurance on your reduced cash salary, the same as with any salary sacrifice arrangement, but you don't pay employee National Insurance on the car's Benefit-in-Kind value itself. Your employer pays a separate Class 1A National Insurance charge on the Benefit-in-Kind, currently 15%, which doesn't affect your take-home pay directly.

Your student loan repayment is based on your reduced cash salary, so sacrificing salary for a car does reduce it, in the same way a pension sacrifice would. The car's Benefit-in-Kind value itself isn't counted as income for student loan purposes, since it's only liable for employer Class 1A National Insurance rather than the Class 1 National Insurance that student loan deductions are linked to.

For plug-in hybrids with CO2 emissions between 1 and 50g/km, the Benefit-in-Kind percentage depends entirely on the official electric-only range, so it's worth checking your scheme provider's quote or the car's official specification rather than guessing. Fully electric cars (0g/km) and conventional petrol or diesel cars (51g/km and above) don't need a range figure at all, since their percentage is set directly by CO2 emissions.

For a fully electric or other ultra-low-emission car, usually yes, since the tax and National Insurance saving on the sacrificed salary is rarely matched by buying or leasing privately, on top of often getting fleet pricing, insurance and maintenance bundled in. For a higher-emission petrol or diesel car, it's much less likely to be worthwhile purely on tax grounds, given the OpRA rules described above, though there can still be convenience benefits like inclusive maintenance. This calculator only estimates the tax effect, not the full value of what's included in a scheme.

OpRA stands for optional remuneration arrangement, the set of rules HMRC introduced in April 2017 to stop salary sacrifice being used to get a low tax charge on benefits that would otherwise cost more in cash. For cars specifically, it means you're taxed on the higher of your salary sacrificed or the car's normal Benefit-in-Kind value, unless the car's CO2 emissions are 75g/km or below, in which case only the normal Benefit-in-Kind value applies.

Not indefinitely. The government has already set out a rising schedule for fully electric cars: 3% in 2025/26, 4% in 2026/27, 5% in 2027/28, then larger increases to 7% in 2028/29 and 9% in 2029/30. Even at 9%, electric cars are still likely to remain far cheaper to tax than an equivalent petrol or diesel car, but the saving will be smaller than it is today, which is worth bearing in mind for a multi-year lease agreement.