You’ve read about the grants, you’ve compared the running costs, but the upfront price of a new electric car can still feel like a barrier. What if you could drive one — with insurance, servicing, tyres, and breakdown cover — for significantly less than a personal lease, all paid before tax?
That’s exactly what an EV salary sacrifice scheme offers. For millions of UK employees, this isn’t a futuristic idea — it’s one of the smartest, most cost-effective ways to get behind the wheel of a brand-new electric car.
Building on what we explored in our Benefit-in-Kind tax guide, this article explains how salary sacrifice works, why it’s uniquely powerful for electric vehicles, and how you can take advantage of it.
What Is a Salary Sacrifice Scheme?
At its core, salary sacrifice is a simple agreement between you and your employer. You give up a small portion of your gross salary (before tax and National Insurance) in exchange for a non-cash benefit — in this case, a fully maintained EV.
Because the payment comes out before tax, your taxable income is reduced. That means you pay less Income Tax and National Insurance, effectively making your car cheaper. It’s the same principle as a cycle-to-work scheme or pension contribution, just applied to an electric vehicle.
The Magic Ingredient: Why It Works Best for EVs
You might ask, “Why don’t people use this for petrol or diesel cars?” The answer lies in Benefit-in-Kind (BiK) tax — the tax you pay when a company provides you with a car for personal use.
For petrol and diesel models, BiK rates are sky-high — typically between 25% and 37%, depending on CO₂ emissions. That wipes out any potential savings. But for pure electric vehicles, the 2024/25 BiK rate is just 2%. Even after this small tax, the savings are huge.
This ultra-low rate is no accident — the government deliberately keeps BiK low for EVs to encourage adoption. It’s a financial nudge with major real-world benefits for employees and businesses alike.
What’s Included? The All-Inclusive EV Package
One of the most attractive aspects of an EV salary sacrifice scheme is its simplicity. Everything is bundled into one fixed monthly payment, giving you complete cost certainty. Typical packages include:
- The brand-new electric car
- Fully comprehensive insurance
- Routine servicing and maintenance
- Tyre replacement
- Breakdown cover
- Vehicle Excise Duty (VED) — currently £0 for EVs
Some providers even include a home charger installation as part of the bundle. In short, it’s like an all-inclusive subscription for your car — simple, predictable, and tax-efficient.
How Do I Get an EV Salary Sacrifice Scheme?
Unlike a personal lease, you can’t sign up directly — your employer has to offer it. The good news is that it’s easier than ever for them to do so. Specialist companies like Octopus EV, Tusker, and The Electric Car Scheme handle the process end-to-end, often at little or no cost to the business.
For employees, the next step is simple: talk to your HR or benefits team. If your company already partners with one of these providers, you could be driving a brand-new EV within weeks.
Are There Any Downsides?
Salary sacrifice is a phenomenal deal for most drivers, but there are a few points to consider:
- Employment-based: The car is tied to your job. If you leave, you’ll need to return it, although most schemes offer insurance to cover early termination.
- Employer participation: Your company must offer the scheme — you can’t set one up independently.
- Impact on benefits: Because your gross salary is technically lower, it may slightly affect pension or life insurance calculations. However, most employers mitigate this in practice.
The Verdict: The Smartest Way to Go Electric
For any PAYE employee with access to one, an EV salary sacrifice scheme is arguably the smartest financial route to a new electric car in 2025. By leveraging the government’s low Benefit-in-Kind rate, drivers can save 30–40% compared to personal leasing, all while enjoying zero-emission motoring and peace of mind.
It’s not just a tax-efficient perk — it’s a strategic way to transition to electric mobility while keeping your monthly costs predictable and affordable. For UK workers, that makes it the ultimate win-win.
Want to make the most of your new EV? Download the ONEEV app to find, charge, and pay effortlessly wherever your journey takes you.
