An electric car salary sacrifice scheme exchanges part of your contractual cash salary for a company car. Whether it is good value depends on the employer's quote, your tax position and the contract. A headline percentage saving cannot answer that question.
The company-car tax rate for 2026/27
For a zero-emission car, the appropriate benefit-in-kind percentage is 4% in tax year 2026/27. It was 3% in 2025/26 and 2% in 2024/25. Those older percentages should not be used in a current quote. HMRC publishes the year-specific company-car percentages.
The percentage determines the taxable benefit, not a percentage discount on the lease. The car's value for tax purposes and applicable adjustments determine the benefit; your income-tax position determines the tax you pay on it. A plug-in hybrid requires its own emissions and electric-range classification.
Ask payroll for a before-and-after calculation
Request two payslip projections for the same pay period: one with your existing salary and one with the proposed sacrifice and company-car benefit. Ask payroll to identify the gross sacrifice, income-tax change, employee National Insurance change and benefit tax separately. Check how the calculation handles a change of tax band or the tax year during the contract.
HMRC's salary sacrifice guidance explains the contractual change and the restriction that cash earnings must not fall below the National Minimum Wage. Salary sacrifice can also affect earnings-related benefits. Confirm whether pension contributions and employer benefits use your original salary or reduced cash salary.
Compare equivalent packages
- Insurance: check named drivers, excess, business use and exclusions.
- Maintenance: identify whether servicing, tyres, damage and replacement transport are included.
- Mileage: compare the same allowance and obtain the excess-mileage charge.
- Early exit: ask what happens after resignation, redundancy, parental leave or long-term sickness. Do not assume transfer to another employer is available.
- End of contract: confirm return standards and whether any purchase option exists. Ownership is not implied by the monthly payment.
A fair comparison with private ownership
A private car can leave you with a saleable asset. A returned scheme car does not. Comparing only the scheme's take-home-pay reduction with a loan repayment therefore mixes two different outcomes. Compare the same period, mileage and services, including the private car's remaining value and outstanding debt at the end.
The old worked example claiming a fixed monthly saving has been withdrawn because its tax rate and financing comparison were not reliable. Obtain a current employer quote and an equivalent private-finance offer. Keep charging and any excluded running costs alongside both packages, then ask payroll to confirm the net cost before signing.