An electric car through your employer is normally the cheapest way to drive a new EV in the UK. The government gives you a big tax break for using your boss's scheme rather than buying one yourself. Type your salary and pick a car. This page works out what you'll actually pay each month. Everything happens on your phone. Nothing is sent anywhere.
For UK higher rate earners, an employer EV salary sacrifice is the cheapest way to drive a brand new electric car. Most people do not realise this. Type your salary and pick a car. EV shows you the maths. Everything runs on your phone. Nothing leaves your device.
For UK higher and additional rate earners, an employer EV salary sacrifice arrangement (s. ITEPA 2003 Part 4 BIK regime, low emission cars at 3% appropriate percentage for 2026/27) is the most tax efficient way to access a new BEV. This calculator models the gross sacrifice, employee NIC saving on sacrifice, marginal IT relief, BIK IT cost, and HICBC interaction. All computed client side.
These figures are approximate, for demonstration only. Please do your own research. For real personal lease quotes try leaseloco.com, vanarama.com, selectcarleasing.co.uk or leasefetcher.co.uk. For salary sacrifice quotes ask your employer, then check octopusev.com, loveelectric.cars or tuskerdirect.com. Paste the actual numbers in to override the defaults. Not personal tax advice. Speak to a chartered accountant before acting.
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What it actually costs youThe result on your inputsNet cost on stated assumptions
A word on the first few months
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In a salary sacrifice scheme, the gross sacrifice comes off your pay immediately from month 1. The income tax on the benefit in kind (BIK) usually lands a month or two later via a HMRC tax code change. So your first one or two payslips may show a take home reduction that is slightly less than the steady state monthly cost shown above. Then the tax code catches up and you settle into the level monthly cost.
What to budget around: the steady state monthly cost shown at the top of this page. Not the first month. Some employers also charge a one off scheme admin fee in month 1 of £100 to £300 — your scheme quote will say if so.
Get an exact figure for your specific situation from your employer's payroll team or the scheme provider once you have a quote in hand. The arithmetic on this page is the same arithmetic HMRC and your employer use, but the timing of when each piece lands on your payslip depends on your specific payroll cycle.
Where the saving comes from
Itemised
The tax system rewards using your employer's scheme. Below shows where each pound of saving comes from. The bad news (income tax on the car as a perk) is included too.
Itemised decomposition: gross sacrifice (headline cost), employee NIC saving on sacrifice, marginal IT relief on sacrifice (net of pension), BIK income tax cost at the weighted appropriate percentage on P11D value, and HICBC clawback offset where applicable.
| Item | Annual £ | Monthly £ |
|---|
Versus buying the same EV with post tax money
Headline
| Path | Gross salary needed | Net cost / month |
|---|---|---|
| Salary sacrifice Through your employer. Tax effective. |
- | - |
| Buy with post tax money Personal lease, PCP or outright, financed from your take home. |
- | - |
| You save with salary sacrifice | - | - |
What if you took a personal lease instead?
3-way compare
The realistic alternatives to salary sacrifice are taking out a personal lease (PCH) for the same EV out of your take home, or going with a petrol/diesel equivalent. Defaults below are sensible for most cases. Get real quotes from leaseloco.com and override any number. Running costs (insurance, fuel, tax, service) are usually bundled into a salary sacrifice quote, so they only need adding for the personal lease paths.
Shared assumptions
Personal lease EV (same car as above)
Petrol equivalent (similar size and spec)
Total monthly cost (post tax)
| Salary sacrifice EV | Personal lease EV | Personal lease petrol | |
|---|---|---|---|
| Lease or sacrifice (post tax effect) | - | - | - |
| Insurance | Included | - | - |
| Fuel or electricity | - | - | - |
| Road tax (incl. £410/yr Expensive Car Supplement for years 2 to 6 on cars over £40,000) | Included | - | - |
| Service, tyres, maintenance | Included | - | - |
| Home charger install (amortised over term) | Included | - | N/A |
| Total per month | - | - | - |
| Total over the term | - | - | - |
| Saving going salary sacrifice instead | - | - | - |
Compare two cars side by side
A vs B
Wondering whether to push for the Tesla or play it safe with the MG4? Tick the box to see both side by side on your salary. Same pension, same term, same tax year. Only the car differs. If you sit between £100,000 and £125,140 of salary, the cheaper car can pull you out of the 60% personal allowance taper, which is a very different move from just saving on the sticker price.
Year-by-year BIK and lifetime view
Transparent
Honest view of how the BIK rate climbs across your lease term and what each year costs in tax. The single weighted average in the headline above is the average of these years.
Used EVs through salary sacrifice. Some schemes (Octopus Electric Vehicles, ELMO) now offer used EVs from around £15k to £30k list price. Lower monthly sacrifice, lower BIK base, still tax efficient. Worth asking your employer's scheme provider.
Multi-term lifetime view
Long horizon
If you replace the EV every term for several terms, what does the cumulative cost look like? Quick approximation. Assumes the same sacrifice, BIK rates frozen at the published roadmap, no inflation.
Buy the EV through your limited company
Director purchase
If you own a limited company, you can buy the EV in the company name instead of via employer salary sacrifice. The mechanics are different. The maths is sometimes better, sometimes worse, depending on your CT rate, your residual value assumption, and your VAT position. This section models it properly.
Sources
Year by year
Cash outlay positive = money out of the company. Negative = money in (sale year). CT impact green = corporation tax saved. Red = extra CT (balancing charge on sale). BIK tax is your personal income tax cost.
| Year | What happens | Cash outlay (company) | CT impact | Your BIK tax | Net for the year |
|---|
What the running cost line covers. Insurance, road tax (including the £410/yr Expensive Car Supplement on cars over £40k for years 2 to 6), service and maintenance, and electricity. Roughly £2,000 a year for a typical 8,000 mile EV.
These are NOT additionally taxed on the director as BIK. The 3% BIK on a low emission company car is HMRC's "fully expensed" rate. It already covers provision of the car AND the running costs the company pays. So no double counting.
One nuance on electricity. The traditional "fuel benefit charge" (s.149 ITEPA) does NOT apply to EV electricity. HMRC has confirmed electricity is not a fuel under that section. In theory, if the company pays for the director's home electricity used for personal mileage, there could be a small general BIK under s.203 ITEPA. In practice most directors instead pay their own home electricity and claim the HMRC EV advisory rate (currently 8p per mile) for business journeys, which removes the question. This calculator assumes the company pays everything and there is no extra BIK on top of the 3% car rate, which is the standard treatment.
Why VAT is blocked on the car purchase. HMRC's input VAT block on cars is binary. If the car has any personal use at all, the company cannot recover any of the 20% VAT on the purchase price. The only common exemptions are pool cars kept at the business address with logbook evidence (almost never a director's car), driving school cars, taxis, and dealer demo cars. Driving from home to office is personal use, full stop. So in practice the £45,000 car has £45,000 of input VAT that disappears.
What you can reclaim VAT on: electricity for business mileage (apportioned), workplace charging (100%), servicing, repairs, and maintenance. Insurance is VAT exempt regardless.
How the corporation tax relief actually works. Year 1 you claim 100% First Year Allowance on the new EV. So at 25% CT, a £45,000 EV gives £11,250 of CT relief in year 1. Tax written down value drops to £0 immediately. Brilliant.
But. When you sell the car at year 4 for, say, £18,000, the full £18,000 becomes a balancing charge. The company adds it back to taxable profits and pays CT on it. £18,000 at 25% = £4,500 of CT clawed back. Net relief over the whole cycle = £11,250 minus £4,500 = £6,750. Which is exactly 25% of the £27,000 economic depreciation. The Treasury is not stupid. You get relief on the actual depreciation, just front loaded.
If you reclaimed VAT on purchase (rare), output VAT applies on sale. If you did not reclaim VAT, the sale falls under the Margin Scheme and no output VAT applies. The model above assumes no VAT reclaim, which is the realistic case.
Recapitalising for the next car. After year 4 you have cash from the sale (net of CT) and you start the cycle again. Over 12 years that is roughly 3 purchase cycles. Each cycle gets fresh 100% FYA. Each cycle ends with a balancing charge. The economic answer is the same as just owning the depreciation cost across the whole period, plus your BIK tax. The cycle is timing, not substance.
Speak to a chartered accountant before committing. This calculator handles the main mechanics. It does not handle: pooling with other vehicles, second-hand purchases (which get 18% writing down allowance not 100% FYA), associated companies for the small profits threshold, VAT partial exemption, or any non-standard structures. Personal circumstances change the answer.
Range: what the maths actually says
Honest read
Range is the single biggest reason people give for not switching to an EV. Worth looking at the actual numbers before deciding.
Time saved per year if you have home charging
A petrol station stop is roughly 7 to 10 minutes door to pump and back on the road. Most UK drivers do it once or twice a week.
That works out at around 6 to 13 hours a year standing on a forecourt.
Home charging takes the time it takes to plug in a phone. Roughly 10 seconds when you pull onto the drive. The car charges overnight on cheap electricity. You wake up to a full tank.
Net saving: somewhere between half a working day and one and a half working days a year back. Plus you never queue at a forecourt at 7am again.
Long trips: 300 miles in a 250 mile EV
- You do not need a full charge. You need enough to reach the destination plus a buffer.
- Rapid chargers go 10% to 80% (~180 miles added) in roughly 25 minutes.
- Driving bodies recommend a break every 2 hours. A 300 mile trip at 60 mph is 5 hours, so you should already be stopping at least once for a coffee, loo, leg stretch.
- That break is when the car charges. The car is ready before you are.
- Net time penalty on a 300 mile trip versus petrol: usually 5 to 10 minutes, sometimes zero.
And on cost. 300 miles in an EV mixing home and rapid charging is roughly £25 to £40 of electricity. The same trip in a 35 MPG petrol at £1.50/L is £55 to £60. So you save £20 to £30 per long trip and the time penalty is in the noise.
Where EVs are still imperfect: an honest list
- Caravan and trailer towing. Range can drop by 40 to 50%. Not ideal if you tow weekly.
- Cold weather. Real world range falls roughly 8 to 15% in winter on modern EVs with a heat pump (most new models), more like 15 to 25% on older models without. Plan trips with this margin in mind.
- Public charging network. Coverage on motorways is now solid. Rural Wales, the Highlands, parts of Devon and Cornwall still have gaps. Plug in the route on A Better Routeplanner (abetterrouteplanner.com) before any long trip somewhere new.
- Flats and on street parking. Without a driveway, home charging is harder. Some councils offer lamppost charging. Workplace charging (if your employer offers it) fills most of the gap and many do. Honest answer: if you cannot charge at home or reliably at work, an EV salary sacrifice is a tougher sell.
Bottom line. Range anxiety is largely a feeling carried over from EVs of 10 years ago when 100 miles was a long range. The modern reality for a driver with a driveway and a typical commute is: you save time, save money, and the rare long trip costs you a coffee break you should have taken anyway.
Things worth knowing
Background
- Eligibility. Your employer needs to offer the scheme. Big providers: Octopus Electric Vehicles, Loveelectric, Tusker, ELMO. Most employers above 50 staff now offer one of these. Smaller employers can also sign up.
- The BIK rate is NOT locked when you sign. HMRC sets the rate each tax year. 2025/26 was 2%, 2026/27 is 3%, 2027/28 will be 4%, 2028/29 will be 5%. So a 3-year lease starting now sees the BIK rate rise from 3% to 4% to 5% across the term. The calculator above uses the weighted average across your full term, which is the honest figure. Starting earlier still gives a lower average rate than starting later, but you cannot anchor a rate for the full term.
- What is included in the sacrifice. Most schemes bundle the lease, insurance, road tax, tyres, breakdown cover and maintenance into one number. You only pay for electricity (typically £400 to £800/yr for home charging).
- What you keep at the end. Nothing. The car goes back. This is a tax efficient lease, not ownership. If you want to own, salary sacrifice is the wrong tool, use FORM for the limited company route or a PCP/HP outside the scheme.
- If you leave the job (voluntary exit). Most schemes charge an early termination fee that often works out to around 6 months of your monthly sacrifice as a lump sum. Some schemes let you transfer the lease to your next employer if they use the same provider. A few let you buy the car out at residual value, though that is rarely economical. The honest answer: do not sign up to a 36 month sacrifice if there is a real chance you will voluntarily leave in the first 12 months.
- If you are made redundant. The big UK scheme providers (Octopus Electric Vehicles, Loveelectric, Tusker) include early termination insurance as standard. If you are made redundant, the insurance covers the termination fee and you can usually walk away from the lease without the lump sum hit. Read the scheme small print carefully because:
- There is usually a minimum service period (often 6 to 12 months) before the redundancy cover kicks in.
- Voluntary redundancy does not always count as redundancy for the insurance.
- Coverage typically excludes redundancy you already knew about when you signed up.
- Maternity, paternity, long term sickness. Usually you can continue the scheme. HMRC explicitly accepts that salary sacrifice can continue during statutory leave. Check with payroll if the sacrifice can be paused or if it continues against your statutory pay.
- Questions to ask the scheme provider before you sign. What is the early termination fee at month 6, 12, 24, 36. Is redundancy insurance included. Does the redundancy cover voluntary redundancy. Can the lease transfer to my next employer. What happens if the car is written off. What is the excess on the included insurance. What is the over mileage charge.
- Mileage limits. Schemes typically cap at 8,000 to 12,000 miles a year. Excess is 5p to 15p per mile.
- Student loan. Sacrificing reduces gross pay below the student loan threshold, so reduces or eliminates student loan deductions too. This calculator does not model that yet — your saving will be slightly bigger than shown if you have a student loan.
- The 100,000 personal allowance taper. If your salary sits between £100,000 and £125,140, sacrificing into an EV is one of the most tax efficient moves available, because every £1 sacrificed saves 60p of income tax (40% rate plus 20% lost allowance). The calculator handles this.
- Lower earners. If you do not pay higher rate income tax (40%) the maths is positive but the saving is smaller. Bigger marginal rate, bigger win.
Built by a CIMA Chartered Management Accountant
EV by AI Finance Partners. Free. Made because every other UK salary sacrifice calculator buries the maths or asks you to register.
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