An easy guide to Electric Car Salary Sacrifice (2022/23)

An easy guide to Electric Car Salary Sacrifice (2022/23)

Posted by

Mark Roberts

February 2022

Salary sacrifice for cars, often shortened to just salsac. It’s a way of giving up some of your salary for a new electric car without it costing you very much, thanks to some taxation advantages.

Sounds complicated. It’s not – honestly! Here’s an easy guide to electric car salary sacrifice.

How does it work?
How do I pay for the car?
Is there a catch?
I don’t want to pay more tax!
Salary Sacrifice in context

How does it work?

You choose the car that you want from a list provided by your employer. The car will come with everything you need – road tax, maintenance and so on. All you have to do is insure the car and (in most cases) provide some electricity when the battery is running low.

How do I pay for the car?

You pay for the car monthly. It comes out of your gross monthly salary – the gross is the amount before any income tax or national insurance is deducted. Which is the clever bit because you save lots of tax and National Insurance on the salary you sacrifice for the car- hurrah!

OK, with you so far – but there’s a catch?

A small one. The car is seen as a benefit by the tax man, so Mr HMRC will want you to pay a little bit of tax on the car.

Woah! I don’t want to pay more tax!

Hear us out. Because this is the cool bit. If you choose an electric vehicle (and why would you not do so?) the benefit in kind taxation is incredibly low. We mean, really low.

Go on then, how low is the tax?

Good, we hoped you’d ask. Let’s take two examples, based on the 2022/23 tax year starting 06 April.

The first is the MINI Cooper SE. To drive this brilliant runabout will cost you just £10 a month (20% taxpayer) or £20 a month if you’re in the higher earner bracket. (We told you it was low.)

The second is the Audi e-tron Sportback. To drive this swish executive SUV will cost you just £22 a month (20% taxpayer) or £44 a month if you’re in the higher earner bracket.

That tax is taken from your net salary – that’s gross salary minus the cost of the car – so you pay a reduced amount of tax overall.

No, that can’t be real!

Sorry to rebuff you, but yes! It is. And that’s why salary sacrifice is such a good idea.

Let’s put it into context

Why don’t we take that MINI Cooper SE as an example based on a 40% taxpayer. This is how the costs break down:

  • Monthly gross cost of the car is £424
  • The net amount you pay after tax and NIC reductions (but plus the benefit in kind) is £263

So you are sacrificing £263 net to drive a car that is fully maintained and looked after – all you need to do is add on insurance and the electricity.

Now, here’s the context bit: if you were to lease the car personally from your monthly take-home pay it would cost you £466 a month.

So salary sacrifice is saving you over £200 per month for the very same car.

That’s a good result, wouldn’t you say?

If you would like to learn more head over to our salary sacrifice car scheme page, where you can arrange to speak with one of our scheme experts.


You also might like…

If you liked this article then check out our posts about similar topics

Flick the switch on your fleet from red to green.

Red hot Wherever you looked on a weather map last week, Europe was either an intense orange or a bright red Worse, mu...

Fleet Alliance: A Best Workplace For Women 2022

We are absolutely delighted to be named A Best Workplace For Women 2022 Making the workplace inclusive is crucial to ...

Techno meltdown for robotaxis, but the road ahead is automated

Oh dear Technology doesn’t always quite deliver what’s intended Malfunctions are never what you want, from the bl...

Beat the cost of living crisis with salary sacrifice

Surging food prices, inflation at over 9% and fuel at card-wilting levels There’s little escaping the rising cost of l...

With leasing costs under pressure, now is the time to switch your fleet to panel funding

When leasing costs are under pressure, we strongly urge businesses with large fleets of vehicles to consider switching t...

Are high fuel prices hurting your drivers?

We are in extraordinary times We are in the days of a litre of diesel costing over 181p a litre Astonishing To fuel a...

What’s your idea of travel in the future?

In Coventry, the future has landed Or, perhaps more accurately, is about to take off The world’s first electric air...

Going green – it’s more than EVs

Congratulations if you’ve ordered an electric car in 2022 - not only are we sure you will love it, but you are among a...

Ready to make the management of your fleet more efficient?

Request a call back


Or Call Us On: 0345 601 8407
Schedule a call back
  • This field is for validation purposes and should be left unchanged.