Hybrid Salary Sacrifice UK: Complete Guide 2026
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Not every driver or business in the UK is ready to switch to a fully electric car, and that’s okay.
Charging networks are expanding rapidly, but for many rural, high-mileage, or infrastructure-limited employees, hybrid salary sacrifice offers the perfect balance between affordability, convenience, and sustainability.
Hybrid salary sacrifice schemes allow employees to drive modern, low-emission cars through a tax-efficient leasing arrangement. While electric vehicles under salary sacrifice can save drivers up to 20-50% compared with personal leasing, hybrid schemes can still achieve up to 30% savings - an attractive alternative for those not yet ready for a full EV.
In this guide, we’ll break down exactly how hybrid salary sacrifice works, how Benefit-in-Kind (BiK) rates apply, and why plug-in hybrids (PHEVs) can offer value for money. You’ll also see how hybrid schemes fit into a broader business strategy, why EVs still come out on top for long-term savings, and how The Electric Car Scheme enables flexible transitions between hybrid and electric models.
How Hybrid Salary Sacrifice Works
A hybrid salary sacrifice scheme functions like an electric car scheme. The employee gives up part of their gross salary in exchange for a new, fully maintained, insured, and taxed vehicle. Because the sacrifice happens before tax and National Insurance deductions, employees pay less tax overall. Employers also save on National Insurance contributions, making this a win-win benefit.
Through The Electric Car Scheme, employees can choose from a wide range of hybrid and plug-in hybrid cars, just as they can with electric models. All cars are leased via FCA-regulated partners, ensuring transparent pricing and full compliance with BVRLA and HMRC rules.
Understanding BiK (Benefit-in-Kind) Tax for Hybrids
The amount of tax paid on a company car is based on its Benefit-in-Kind tax rate, which depends on its CO₂ emissions, electric-only range, and list price.
The lower the emissions, the lower the BiK, and the greater the savings.
| Vehicle type | CO₂ emissions | Electric range | Typical BiK range |
|---|---|---|---|
| Self-charging hybrid (HEV) | 80-120 g/km | N/A | 22-29% |
| Plug-in hybrid (PHEV) | 1–50 g/km | 20-129 miles | 6-15% |
| Range-extended EV | <50 g/km | 150+ miles | 3-6% |
Plug-in hybrids with longer electric ranges (such as the BMW 330e or Volvo XC60 Recharge) benefit from the lowest hybrid BiK rates. In contrast, conventional hybrids without charging capability ( like the Toyota Corolla Hybrid) fall into higher brackets due to their higher emissions.
How It Differs from Electric Car Salary Sacrifice
Fully electric cars enjoy a 3% BiK rate this year, gradually rising to 9% by 2029/30. This means employees driving EVs under salary sacrifice pay significantly less tax than hybrid drivers. For example:
Tesla Model 3 EV (3% BiK) = ~£25/month tax
BMW 330e PHEV (8% BiK) = ~£90/month tax
Toyota Corolla Hybrid (14% BiK) = ~£150/month tax
Image source: Toyota Media Centre
While hybrids still save compared with petrol cars (which can reach 30–37% BiK), EVs remain the most cost-efficient over a 3-4 year term.
Types of Hybrid Cars Available
Hybrid vehicles fall into three broad categories: self-charging hybrids (HEV), plug-in hybrids (PHEV), and range-extended electric vehicles (REx). Each works differently and attracts different tax rates.
Self-Charging Hybrids (HEV)
Self-charging hybrids, like the Toyota Corolla Hybrid, Honda Jazz Hybrid, and Hyundai IONIQ, use a small battery and electric motor to support the petrol engine. The car recharges itself while driving and braking, meaning no charging cable is needed.
They’re ideal for drivers without regular access to charge points, but their electric range is limited (usually under two miles), so the emissions remain higher. This explains their 14-16% BiK rates, which are still more favourable than diesel or petrol company cars.
Plug-in Hybrids (PHEV)
Plug-in hybrids can be charged at home, work, or public stations, delivering between 30-129 miles of electric-only range (depending on the model you choose). If driven primarily on electric power, they can cut fuel use and emissions significantly.
Popular plug-in hybrid models available through The Electric Car Scheme include:
BMW 330e - 6% BiK, 37-mile range, strong company car credentials
Volvo XC60 Recharge - 8% BiK, 55-mile range, ideal for family drivers
Kia Niro PHEV - 8% BiK, 40-mile range, affordable all-rounder
Mercedes A250e - 6% BiK, 45-mile range, premium compact option
Image source: Kia Press Office
The most efficient plug-in hybrids (with electric ranges above 80 miles) qualify for the lowest 6% BiK rate.
Range-Extended EVs (REx)
Range-extended vehicles, such as the Mazda MX-30 R-EV, work primarily as electric cars but feature a small petrol generator that recharges the battery when needed. These vehicles can achieve BiK rates between 3-6%, depending on emissions, and represent a transitional bridge between hybrid and fully electric driving.
Cost Comparison: Hybrid vs EV vs Personal Lease
Understanding how much you can save through salary sacrifice comes down to comparing plug-in hybrids (PHEVs) and fully electric cars (EVs) against traditional personal leasing. Below are examples of popular models available through The Electric Car Scheme, showing the monthly costs and Benefit-in-Kind (BiK) implications for a 40% taxpayer who chooses to lease the car for 4 years.
| Model | Type | Total salary sacrifice cost (monthly) | Income tax & National Insurance savings (monthly) | BiK tax costs (monthly) | 4-year saving compared to personal lease |
|---|---|---|---|---|---|
| Mercedes C300E Urban Edition 9G-Tronic | PHEV | £830 | £460 | £196 | £12,677 |
| Audi A5 Saloon E Quattro Technik S Tronic | PHEV | £657 | £316 | £221 | £4,568 |
| Tesla Model 3 (Long Range RWD) | EV | £563 | £236 | £84 | £10,800 |
Both Plug-in hybrids and EVs will save thousands if you choose to salary sacrifice compared with personal leasing. However, if you choose to salary sacrifice an EV, you’ll inevitably save more because of the lower BiK tax. Use our quote tool to see how much you could save on your dream car!
Fuel and Charging Costs
Plug-in hybrids can operate in pure-electric mode for short commutes and use petrol for longer trips. If charged regularly, you’ll notice your reduction in fuel costs. For most drivers:
PHEV running costs: ~£60-£80 per month for petrol
EV running costs: ~£25-£30 per month in home-charging electricity (off-peak tariffs)
Maintenance Costs
EVs have fewer moving parts and minimal servicing needs. Hybrids still require petrol engine maintenance, which can add hundreds of pounds annually.
EVs require fewer oil changes, filters, and brake replacements, saving approximately 29% in maintenance costs over five years. Hybrids, while more efficient than petrol models, still need engine servicing and emissions checks.
Insurance and Other Considerations
Most salary sacrifice packages include comprehensive insurance, roadside assistance, and maintenance. This bundling makes hybrids cheaper overall than personal leases, where drivers pay separately for these.
Who Should Consider Hybrid Salary Sacrifice?
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Hybrid salary sacrifice schemes aren’t one-size-fits-all, but they’re an excellent solution for particular drivers and businesses.
Transition-Hesitant Employees
Some employees are enthusiastic about greener driving but hesitant to commit to a full-electric vehicle. A hybrid car offers familiarity with petrol refuelling, reassurance about range, and measurable savings.
High-Mileage or Rural Drivers
For drivers who regularly travel long distances - particularly across rural or motorway-heavy routes - plug-in hybrids offer flexibility. They can rely on electric power for commutes and petrol for longer trips without worrying about charger availability.
Companies with Diverse Employee Needs
Large organisations often employ staff across varied locations. Offering both EV and hybrid options ensures inclusivity and prevents “benefit inequality.”
Temporary Transitioners
For businesses implementing sustainability strategies, hybrids can act as a short-term measure. As infrastructure improves, these drivers can transition to full EVs at their next renewal - often through the same scheme.
The Business Case for Mixed Fleet Solutions
A mixed fleet allows employers to support all driver types while aligning with ESG and cost-saving goals.
Employee Flexibility - Offering both EVs and hybrids demonstrates inclusivity, which is essential for both engagement and retention.
ESG Impact - Replacing petrol and diesel vehicles with hybrids and EVs still lowers emissions dramatically. But long-term ESG alignment favours EV adoption as infrastructure improves.
Operational Ease - With The Electric Car Scheme, hybrid and electric options sit under a single payroll system - simplifying management while keeping compliance with HMRC and BVRLA standards.
Why Companies Should Offer Both EVs and Hybrids
A mixed fleet solution - where employees can choose between electric and hybrid cars - gives organisations the flexibility to meet diverse needs while keeping sustainability on track.
Employee Engagement and Retention
Offering both hybrid and electric options can enhance employee satisfaction, particularly for staff who live in flats or rural areas with limited charging. It means no one is excluded from the company car benefit.
Cost and Compliance
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From an accounting standpoint, both EV and hybrid salary sacrifice cars are classed as Ultra Low Emission Vehicles (ULEVs) if their CO₂ emissions are below 75 g/km. This helps employers meet ESG reporting targets while benefiting from reduced Class 1A NIC liabilities.
ESG and Corporate Reputation
Providing low-emission vehicles helps businesses align with Scope 3 emissions reporting, demonstrating tangible progress toward Net Zero targets. Offering both hybrids and EVs allows gradual fleet electrification without disruption.
Simplified Administration
Through The Electric Car Scheme, employers manage everything under one platform: from payroll integration to insurance and HMRC compliance. This reduces admin time and ensures every employee receives transparent, regulated pricing.
Making the Switch: From Hybrid to EV
For many drivers, hybrid cars serve as a gateway to electric vehicles. Once they experience the smoother drive, lower fuel costs, and maintenance savings, upgrading to a full EV often becomes the natural next step.
When to Transition
Employees typically consider upgrading when:
Their average daily mileage drops below 50 miles
They gain access to reliable home or workplace charging
Their hybrid reaches lease renewal
With The Electric Car Scheme, upgrades are easy. Employees can transition from a PHEV to a full EV at the end of their contract or mid-term (depending on leasing partner terms).
Planning now for a fully electric fleet helps future-proof budgets, simplify reporting, and improve corporate sustainability credentials.
Final Thoughts
Hybrid salary sacrifice schemes are a practical, cost-effective bridge between traditional motoring and the all-electric future. They deliver up to 30% savings compared with personal leasing and make low-emission driving accessible to all employees - even those without home chargers.
Saying this, the numbers are clear: electric cars outperform hybrids in total savings, tax efficiency, and environmental impact. By adopting a mixed fleet model, offering both EVs and hybrids, businesses can support every driver’s journey to net zero.
Ready to explore hybrid and electric salary sacrifice options for your team?
The Electric Car Scheme makes it simple for UK businesses to offer low-emission cars through salary sacrifice, whether you’re starting with plug-in hybrids or going fully electric. Get a tailored quote, explore available models, and see how much your employees could save with Benefit-in-Kind rates from just 3%. Book a demo and learn more today!
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Last updated: 23/10/2025
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.
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