Salary sacrifice car leasing allows employees to get a new car through their employer, with the cost taken from their gross salary before tax and National Insurance.
It can be a cost-effective way to drive a new car, particularly an electric vehicle.
How Does It Work?
If your employer offers a salary sacrifice car scheme, you choose a vehicle from the options available and agree to sacrifice a set amount of your salary each month.
Your salary sacrifice amount depends on the car you choose and the terms of your employer's scheme.
Unlike a personal car lease, the payments are taken directly from your salary as an employee benefit.
What's Included?
Depending on the scheme, your salary sacrifice package may include:
- The car
- Insurance
- Road tax
- Servicing and maintenance
- Breakdown cover
- Tyres
What's included varies, so check your employer's specific scheme.
Why Choose an Electric Car?
Electric cars are particularly popular with salary sacrifice schemes because they currently have lower Benefit-in-Kind (BiK) tax rates than many petrol and diesel cars.
This can make an EV an attractive option for employees looking for a new car.
Salary Sacrifice vs Personal Leasing
With salary sacrifice, the cost comes from your gross salary through your employer's scheme.
With personal leasing, you pay the lease from your take-home income.
Salary sacrifice may also include insurance, servicing and other costs, depending on the scheme.
Is It Right for You?
Salary sacrifice could be worth considering if your employer offers a scheme and you're looking for a new car, particularly an electric vehicle.
Before signing up, check the impact on your take-home pay, what's included and what happens if you leave your employer.
Have a Question?
Not sure whether salary sacrifice or personal leasing is right for you? Our team is here to help.
Salary sacrifice schemes, eligibility, tax treatment and what's included vary by employer and individual circumstances. Check your employer's scheme for full details.
