EV Lease Scheme: Your Complete Guide to Salary Sacrifice Electric Car Leasing in 2026
Source: Shutterstock
Understanding how an EV lease scheme works can transform your approach to getting an electric car. For UK employees and employers alike, salary sacrifice electric car schemes represent the most cost-effective route to driving a brand-new electric vehicle whilst supporting sustainability goals.
What is an EV Lease Scheme?
An EV lease scheme enables employees to lease an electric car through their employer using a salary sacrifice arrangement. Rather than paying for a vehicle lease from take-home pay, employees agree to reduce their gross salary in exchange for the use of an electric car. This approach delivers substantial tax savings because the lease payment is deducted before Income Tax and National Insurance calculations.
The scheme works as a non-cash employment benefit, meaning you're exchanging part of your pre-tax salary for access to an electric vehicle. All costs associated with running the car—including insurance, maintenance, servicing, breakdown cover, and often even a home charger—are bundled into one simple monthly payment.
Through The Electric Car Scheme, employees can choose from over 50 manufacturers and hundreds of electric vehicle models, from compact city cars to premium SUVs, all whilst benefiting from significant tax advantages.
How Does an Electric Car Salary Sacrifice Scheme Work?
The process of leasing an electric car through salary sacrifice is straightforward and designed to be as simple as possible for both employees and employers.
The Step-by-Step Process
First, your employer partners with an electric car scheme provider like The Electric Car Scheme. Once the scheme is established, eligible employees can browse available vehicles and configure their ideal electric car, selecting lease terms typically ranging from 24 to 48 months and annual mileage allowances between 5,000 and 30,000 miles.
After selecting your vehicle, you'll receive a quote showing your gross monthly salary sacrifice amount and your net monthly cost after tax savings. The employer then leases the vehicle on your behalf, and the monthly lease cost is deducted from your gross salary before tax calculations. You receive your new electric car, fully insured and maintained, with everything included in your monthly payment.
Understanding the Tax Benefits
The remarkable savings available through an electric car salary sacrifice scheme stem from two key factors: pre-tax deductions and exceptionally low Benefit-in-Kind rates for electric vehicles.
When you sacrifice salary, you reduce your taxable income, saving both Income Tax and National Insurance contributions. For a 40% taxpayer, this alone represents significant savings. Additionally, you'll pay Benefit-in-Kind tax at just 3% in 2025/26, compared to up to 37% for high-emission petrol and diesel vehicles.
To illustrate these savings, consider leasing a Nissan Ariya with an average monthly salary sacrifice of £584. A 40% taxpayer would save approximately £234 in Income Tax and £12 in National Insurance contributions, whilst paying only £55 in Benefit-in-Kind tax. The net monthly cost becomes just £393—a saving of £191 per month compared to the gross sacrifice amount.
EV Lease Scheme vs Traditional Car Leasing
Understanding the differences between an EV lease scheme through salary sacrifice and traditional personal car leasing helps clarify why salary sacrifice has become so popular for electric vehicles.
Cost Comparison
Traditional personal car leasing requires monthly payments from your take-home salary after all taxes have been deducted. If you're a 40% taxpayer leasing a car for £400 per month, you'd need to earn approximately £667 in gross salary to cover that payment. With salary sacrifice, you'd pay the £400 from your gross salary before tax calculations, immediately delivering substantial savings.
The difference becomes even more pronounced when you consider that traditional leases often exclude insurance, maintenance, and servicing costs, which you must pay separately from your net income. An electric car scheme UK bundles all these costs into your pre-tax payment.
What's Included in Each Option
A personal car lease typically covers only the vehicle lease itself. You'll need to arrange and pay separately for insurance (often £600-£1,200 annually), servicing and maintenance (£300-£600 annually for electric vehicles), breakdown cover (£100-£200 annually), and road tax (£10 for electric vehicles in 2025/26, then £195 from the second year).
By contrast, a comprehensive company electric car scheme includes everything: the vehicle lease, fully comprehensive insurance with low or zero excess, servicing and maintenance throughout the lease term, breakdown cover, road tax for the duration, and often a home charger installation. Some schemes, including The Electric Car Scheme, also offer access to The Charge Scheme, enabling you to salary sacrifice your EV charging costs and save 20-50% on home, workplace, and public charging.
Flexibility and Commitment
Traditional leases offer more flexibility for self-employed individuals or those whose employers don't offer salary sacrifice schemes. However, salary sacrifice schemes provide significantly better value for employees with access to them, particularly given the current low BiK rates for electric vehicles.
Benefits of an EV Lease Scheme for Employees
Choosing to lease an electric car through an EV lease scheme delivers numerous advantages beyond the obvious tax savings.
Substantial Cost Savings
Employees typically save 20-50% compared to personal leasing or purchasing an electric vehicle. These savings stem from the combination of pre-tax payments, low BiK rates, employer National Insurance savings (often passed to employees), and bundled insurance and maintenance costs. For many employees, these savings make premium electric vehicles that would otherwise be unaffordable suddenly accessible.
A Tesla Model 3 or Volkswagen ID.4 that might cost £600-£700 per month through traditional leasing could cost just £350-£400 per month net through salary sacrifice for a 40% taxpayer.
Simplified Electric Car Ownership
An electric car salary sacrifice scheme removes the complexity and unexpected costs associated with car ownership. Everything is covered in one predictable monthly payment, with no surprise repair bills, insurance renewals, or MOT costs to worry about. This predictability makes budgeting significantly easier.
Additionally, schemes like The Electric Car Scheme handle all administrative aspects, from arranging insurance to scheduling servicing, allowing you to focus simply on enjoying your electric vehicle.
Access to New Electric Vehicles
Salary sacrifice schemes provide access to the latest electric vehicle models with the newest technology, longest ranges, and most advanced safety features. You can upgrade to a new model every few years as your lease ends, always driving a car under warranty with the latest innovations.
Whether you're interested in the best small electric cars, electric SUVs, or the best electric family cars, an EV lease scheme provides access to vehicles across all segments.
Environmental Benefits
Driving an electric car through a salary sacrifice scheme contributes to reducing your carbon footprint and supports the UK's journey to Net Zero. Electric vehicles produce zero tailpipe emissions, and when charged with renewable energy, their environmental impact decreases further.
Many employees find that driving an electric car aligns with their personal values around sustainability, whilst employers benefit from demonstrating their commitment to green initiatives and corporate social responsibility.
Benefits of an EV Lease Scheme for Employers
Forward-thinking employers are increasingly offering electric car salary sacrifice schemes as a strategic employee benefit.
Zero Net Cost to Business
One of the most attractive aspects of an electric car scheme for employers is that it typically costs nothing to implement or run. The Electric Car Scheme charges no setup fees, no ongoing administration charges, and no hidden costs. Employers may even save on National Insurance contributions when employees sacrifice salary.
The scheme pays for itself whilst delivering a valuable employee benefit that enhances your compensation package without impacting your bottom line.
Complete Employer Protection
Traditional concerns about employer liability when offering company cars have been addressed through innovative products like Complete Employer Protection. This safeguards businesses from financial risks if employees leave, are made redundant, or take extended leave during the lease period.
Protection covers situations including early termination without penalties, maternity and paternity leave, redundancy scenarios, and unpaid damage or fees. This protection operates from day one with no exclusion periods, eliminating the traditional risks that made some employers hesitant about offering company car schemes.
Attracting and Retaining Talent
In a competitive employment market, offering an EV lease scheme demonstrates that your organisation values employee wellbeing and sustainability. The substantial savings available make this benefit particularly attractive to prospective employees, potentially giving you an edge when recruiting top talent.
Current employees appreciate the financial benefits and convenience, contributing to improved retention rates and employee satisfaction.
Supporting Sustainability Goals
Offering an electric car salary sacrifice scheme helps organisations meet their environmental, social, and governance (ESG) objectives and work towards Net Zero targets. Each employee who switches from a petrol or diesel vehicle to an electric car reduces the company's overall carbon footprint, demonstrating tangible progress towards sustainability commitments.
Running Costs: Why Electric Cars Save Money
Beyond the tax advantages of an EV lease scheme, electric cars offer substantially lower running costs compared to petrol and diesel vehicles.
Charging vs Refuelling Costs
The cost difference between powering an electric car and refuelling a petrol vehicle is remarkable. Charging a Volkswagen ID.3 at home through an EV tariff costs approximately £630 annually, whilst filling a comparable Ford Focus with petrol costs around £1,230 annually—a potential saving of £600 per year.
When you consider that most EV drivers charge primarily at home overnight using cheaper off-peak electricity rates, the savings increase further. Through schemes like The Charge Scheme, employees can salary sacrifice their charging costs and save an additional 20-50% on all charging, whether at home, at work, or using public charging networks.
Maintenance and Servicing Savings
Electric vehicles have significantly fewer moving parts than internal combustion engine cars—no oil to change, no spark plugs to replace, no exhaust systems to repair. This translates to approximately 50% lower servicing, repair, and maintenance expenses compared to petrol vehicles, potentially saving drivers between £600-£1,200 annually.
Average servicing costs for an electric car sit around £165, compared to £205 for a petrol vehicle - a 24% difference. When these costs are bundled into your salary sacrifice scheme, you benefit from predictable expenses with no surprise repair bills.
Tax Advantages
Beyond BiK tax, electric vehicles benefit from reduced road tax (VED). From April 2025, new electric vehicles pay just £10 in the first year, then £195 annually from the second year—still considerably less than high-emission petrol and diesel vehicles, which can pay over £500 annually.
Electric vehicles also benefit from exemptions from congestion charges in most UK cities. The Ultra Low Emission Zone (ULEZ) exemption for electric vehicles saves London drivers £12.50 per day if they would otherwise need to pay, representing potential annual savings of over £3,000 for daily commuters.
How to Get Started with an EV Lease Scheme
If you're considering leasing an electric car through salary sacrifice, the process is straightforward.
For Employees
First, check whether your employer currently offers an electric car salary sacrifice scheme. If they do, contact your HR department to express interest and request information about how to participate. If they don't, you can encourage them to explore the benefits of implementing a scheme—The Electric Car Scheme makes it simple with zero setup costs and comprehensive employer protection.
Once confirmed that a scheme is available, browse available vehicles and use salary sacrifice calculators to understand your potential savings. Consider your typical daily mileage, charging options, and what features matter most to you when selecting your ideal electric car.
Submit your application through your employer's chosen scheme provider, undergo any required eligibility checks, and complete the necessary paperwork. Your new electric car will typically arrive within 2-14 weeks for used vehicles or 3-6 months for new builds, depending on the model selected.
For Employers
Implementing an EV lease scheme for your workforce begins with researching providers and selecting one that offers comprehensive coverage, competitive pricing, strong employer protection, and excellent customer service. The Electric Car Scheme meets all these criteria with additional benefits like Complete Employer Protection and The Charge Scheme for salary sacrifice charging.
Work with your chosen provider to establish the scheme parameters, communicate the benefit to employees, and handle ongoing administration—most of which the provider will manage on your behalf. The entire process typically takes just a few weeks from initial enquiry to launch.
Common Questions About EV Lease Schemes
Will Salary Sacrifice Affect My Pension?
Salary sacrifice can affect pension contributions if your pension is calculated as a percentage of your gross salary. However, many employers protect pension contributions by calculating them on your pre-sacrifice salary, or the overall tax savings from salary sacrifice often outweigh any small reduction in pension contributions. Discuss this with your HR department to understand your specific situation.
Can I End My Lease Early?
Most EV lease schemes include early termination options, particularly for life events like redundancy, long-term sickness, or maternity leave. The Electric Car Scheme's Complete Employer Protection means employers aren't financially penalised if employees need to return vehicles early, making the scheme more flexible than traditional company car arrangements.
What Happens if I Change Jobs?
If you change jobs during your lease period, options typically include transferring the agreement to your new employer if they operate a compatible scheme, settling the remaining lease balance, or returning the vehicle with your current employer protected from costs through Complete Employer Protection. Your specific options depend on your circumstances and scheme terms.
The Future of EV Lease Schemes
The outlook for electric car salary sacrifice schemes remains exceptionally positive. With BiK rates for electric vehicles staying at just 3% in 2025/26 and rising only gradually to 9% by 2029 - still far below the 37% maximum for petrol and diesel vehicles - salary sacrifice will continue offering substantial savings throughout the remainder of the decade.
As the UK government maintains its commitment to achieving Net Zero by 2050, with new petrol and diesel car sales ending by 2035, the future of transport is undeniably electric. Electric vehicle technology continues advancing rapidly, with longer ranges, faster charging, and more affordable options becoming available each year.
The combination of improving technology, favourable tax treatment, and comprehensive schemes like The Electric Car Scheme means there's never been a better time to explore EV lease schemes through salary sacrifice.
Is an EV Lease Scheme Right for You?
An electric car salary sacrifice scheme represents the most cost-effective way for UK employees to access brand-new electric vehicles whilst supporting sustainability goals. With savings of 20-50% compared to traditional leasing, BiK tax at just 3%, and all costs bundled into one simple pre-tax payment, the financial benefits are compelling.
For employers, offering an EV lease scheme provides a zero-cost employee benefit that supports recruitment, retention, and ESG objectives whilst protecting the business from traditional company car risks through products like Complete Employer Protection.
Whether you're an employee looking to reduce your motoring costs and environmental impact, or an employer seeking to enhance your benefits package and support sustainability, exploring an electric car salary sacrifice scheme is a smart strategic decision.
To discover how much you could save through an EV lease scheme, visit The Electric Car Scheme today and start your journey towards affordable, sustainable electric mobility.
Are you an employer?
BOOK A DEMOAre you an employee?
SEE AVAILABLE CARSECS GUIDES AND ADVICE
Ready to Go Electric? Your Guides and Tools to a Smooth Switch
-
How the Scheme WorksFind out how salary sacrifice can work for you or your business.
-
The Charge SchemeSave 20-50% on all charging costs through salary sacrifice - at home, the office, or in public..
-
Complete Employer ProtectionAll employers and drivers are protected from day 1.
-
Used Electric CarsDiscover the most affordable way to drive electric. Cars delivered in 14 days.
You might also like…
Last updated: 06/10/2025
Our pricing is based on data collected from The Electric Car Scheme quote tool. All final pricing is inclusive of VAT. All prices above are based on the following lease terms; 10,000 miles pa, 36 months, and are inclusive of Maintenance and Breakdown Cover. The Electric Car Scheme’s terms and conditions apply. All deals are subject to credit approval and availability. All deals are subject to excess mileage and damage charges. Prices are calculated based on the following tax saving assumptions; England & Wales, 40% tax rate. The above prices were calculated using a flat payment profile. The Electric Car Scheme Limited provides services for the administration of your salary sacrifice employee benefits. The Electric Car Scheme Holdings Limited is a member of the BVRLA (10608), is authorised and regulated by the FCA under FRN 968270, is an Appointed Representative of Marshall Management Services Ltd under FRN 667174, and is a credit broker and not a lender or insurance provider.
Copyright and Image Usage: All images used on this website are either licensed for commercial use or used with express permission from the copyright holders, in compliance with UK and EU copyright law. We are committed to respecting intellectual property rights and maintaining full compliance with applicable regulations. If you have any questions or concerns regarding image usage or copyright matters, please contact us at marketing@electriccarscheme.com and we will address them promptly.
