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How Does a Salary Sacrifice Car Scheme Work?

Explained simply a salary sacrifice can save you money and is a means of exchanging part of your pre-taxed salary for a benefit, in this case, a brand new electric lease car for a fixed term such as 2, 3 or 4 years.

What is Car Salary Sacrifice?

Salary Sacrifice is a scheme that enables employees to ‘sacrifice’ some of their salaries in return for a brand-new company-leased car. Because the sacrifice is a deduction from an employee’s gross salary, cost savings are made on Income Tax and National Insurance. This makes the cost of leasing a car cheaper than leasing the same vehicle on a Personal Contract Hire agreement.


Benefits are increased significantly for both parties if the vehicle leased is electric and if you add insurance and a fully fitted home charger to the salary sacrifice. Watch our short video below for more information about how Salary Sacrifice works.

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Car Salary Sacrifice In a Nutshell...

The scheme offers eligible employees the opportunity to exchange some of their taxable salary for a brand-new leased vehicle over a set contract length of between 24 and 48 months. Salary sacrifice is classed as a benefit, therefore HMRC Benefit in Kind (BIK) tax is payable.


However, the scheme offers savings because the salary deduction is made from your gross salary (before tax and National Insurance), so it’s cheaper than personally leasing the same vehicle thanks to reduced Income Tax and National Insurance contributions. We’ll provide calculations with your quotation to highlight the savings you can enjoy.

Benefits increase significantly if you choose to lease a fully electric vehicle.

Lease a Tesla with SalSac
Electric Car Charging

Car Salary Sacrifice Eligibility

To be eligible for the scheme you must fit the following criteria:


✓ You must be aged between 18 and 75 years old

 You must hold a valid driving licence for the duration of the lease period

✓ You must be a permanent PAYE employee and have completed your probationary period

 You must be a permanent UK resident


✓ Your gross basic pay must not fall below the National Minimum Wage or National Living Wage after the salary sacrifice deduction

Choice of Lease Car
Choice of Lease Cars on Salary Sacrifice

All vehicles are brand new and in most instances, you can specify accessories and colour (subject to availability).


We offer most makes and models, however, you should refer to your employer or broker to check if any vehicles have been excluded from your scheme.


The biggest savings are made when you choose a fully electric vehicle, due to the low Benefit in Kind (BIK) tax payable.

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