Beat the cost of living crisis with salary sacrifice

Beat the cost of living crisis with salary sacrifice

Posted by

Andy Bruce

June 2022

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

So giving up some of your gross salary might seem a strange way to beat this cost of living crisis. But stay with us: giving up some of your salary – why would you want to do this?

Well let’s be clear, it’s not about giving money away; it’s about exchanging your gross salary for something that won’t empty your pockets every time you place a nozzle near the filler cap.

You’ve no doubt come across salary sacrifice before. You exchange some of your gross salary for a benefit. This might be childcare; it could be a bicycle under the cycle to work scheme; or, perhaps, it’s a gym membership; there are many more examples.

However, in this case, we’re suggesting you sacrifice your salary in exchange for a new electric car.

Now we know electric cars can be expensive to buy, but under our salary sacrifice scheme, you can save up to 50% of the cost if you were to lease an electric car privately. And because you have switched to the newest electric car, you’ll also save some £2,000 a year on fuel costs.

Think about that fuel figure – a  £2,000 a year saving. What would you do with that right at this moment?

Hopefully, we have your attention, so let’s have a look at the figures in greater detail. Starting with the 50% saving first. Here goes.

How to save up to 50% on a new EV

We’ll compare the all-electric Mercedes-Benz EQC all-electric SUV against what you would pay for it privately.

What we have done here is compare the cost of the Mercedes EQC (1) under a personal contract hire (PCH) leasing agreement (2) with the same car if you were to choose a salary sacrifice scheme.

The monthly costs take into account all servicing and maintenance – such as new tyres – as well as insurance. The only thing you have to do is add electricity.

All told the savings via salary sacrifice are just over 50% a month thanks to reductions in income tax and National Insurance (because you have lowered your gross salary before tax in exchange for the car). There is some benefit tax to pay for the car, but this is negligible in comparison to the savings on offer.

And those savings really add up – equivalent to in excess of £24,000 over a three-year agreement period. Twenty-four thousand. Pounds.

See what we mean about helping you cope with the cost of living?

Take a look at the figures:

But, of course, your savings don’t stop there if you are stepping away from a petrol car into an electric car on salary sacrifice. The good part is that there are still more savings to come.

If filling up at the fuel pumps doesn’t already make you catch your breath at the cost, our example below shows why you must stop putting fuel in your car and start putting money back into your own pocket.

How to save £2,000 a year by going EV

We’re sticking with our Mercedes EQC all-electric SUV, but this time comparing the electric car against a similar petrol SUV from a rival premium German car maker, in this case Audi and its Q5 (3).

Taking an average 192 miles driven each month, we’ve worked out the cost of the Mercedes at 2.8m/kWh (this is an electric version of mpg – so nearly three miles for every kWh of battery charge) using electricity at a cost of 14.4p/kWh (4).

For the Audi we’ve taken its average mpg of 32.5 at a cost of 185p per litre (5) – equivalent to £8.24 a gallon  Here are the calculations.

With the parameters we’ve applied going electric will save you £39 a week on fuel costs, the equivalent of more than £2,000 a year.

In reality, the savings will probably be higher, since the Mercedes EQC’s average mileage per kWh is highly conservative and if EV off-peak charging is used, the cost per kWh can drop to as little as 4p. Meanwhile, the Audi is unlikely to hit its average mpg in real usage.

Nevertheless, the comparison shows how much money you could be saving by switching from the fuel pump to the electric charger. Over three years that’s a £6,000 saving which could help you to budget more efficiently and save money despite the rising cost of living.

So giving up some salary is a good idea. Especially when it could save you so much money to the tune of £30,000 over three years.

Want to know more? Find out how electric car salary sacrifice can help you beat the cost of living.


(1) Mercedes EQC Estate 400 300kW Sport 80kWh 5dr Auto
(2) Personal contract hire quotation based on 3 year, 10,000 miles per annum, no deposit, one payment in advance, fully maintained agreement plus insurance (compared 14/06/2022)
(3) Audi Q5 Estate 45 TFSI Quattro Sport 5dr S Tronic [C+S] 2023
(4) (as of 14/06/2022)
(5) (as of 14/06/2022)

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