How much can I save with electric salary sacrifice vs hybrid?

Over a 4-year lease term, electric vehicles typically save £4,785 compared to plug-in hybrids and £6,954 compared to self-charging hybrids. When comparing to personal leases, EVs can save £7,000-£8,000 over the lease term. These savings come from lower BiK tax rates (3% for EVs vs 6-29% for hybrids), lower fuel costs (electricity vs petrol), and reduced maintenance costs.

What are the BiK rates for hybrid vs electric cars in 2026?

In 2025/26, fully electric vehicles have a BiK rate of 3% (frozen until April 2028). PHEVs with 70+ mile electric range have 6% BiK, those with 40-69 miles have 9% BiK, and those with 30-39 miles have 13% BiK. Self-charging hybrids face much higher rates of 24-29%. From 2028, all vehicles emitting 1-50 g/km CO₂ (most plug-in hybrids) will face BiK rates of 18-19%, while EVs remain low.

Should I choose a hybrid or electric for salary sacrifice if I can't charge at home?

If you cannot charge at home, a plug-in hybrid may be more practical in the short term, especially if you drive long unpredictable routes regularly. However, if you primarily drive predictable routes with access to public charging, an electric vehicle can still work well. Consider that without regular charging, a PHEV effectively becomes an expensive petrol car with higher running costs and BiK tax. Evaluate your access to workplace or public charging before making a decision.

Can I switch from hybrid to electric during my salary sacrifice lease?

The Electric Car Scheme offers built-in renewal pathways that allow employees to upgrade early from PHEV to EV as their confidence and charging access improve. This flexibility is particularly valuable as BiK rates for hybrids are set to increase significantly in 2028, making the transition to fully electric vehicles more financially advantageous.

Hybrid vs Electric Salary Sacrifice 2026: Complete Cost Comparison

Key Insights

Pure electric vehicles deliver significantly greater savings through salary sacrifice - over a typical 4-year lease, EVs save employees thousands more than hybrids, thanks to the favourable 3% Benefit-in-Kind tax rate (compared to 6-19% for hybrids) and lower running costs.
Hybrid salary sacrifice remains a viable option for hesitant employees - despite lower savings than pure EVs, hybrids still deliver up to 30% cost reductions compared to personal leasing, making them a practical stepping stone for those not yet ready to go fully electric. However, new Euro 6e-bis emissions testing from 2026 will push BiK rates higher for many plug-in hybrids.
Total ownership costs clearly favour electric vehicles - when you factor in fuel, maintenance, and tax, EVs cost between £100-230 per year to maintain compared to £300-500 annually for hybrids, demonstrating genuine long-term value beyond just the initial lease payments.
Plug-in hybrids work best for drivers with home charging - employees with regular charging access can achieve 50-70% electric driving for daily commutes, though real-world PHEV efficiency typically falls around £500 per year short of manufacturer claims, making accurate cost projections important when choosing your vehicle.

Not every driver is ready to go fully electric just yet. For some employees, hybrid salary sacrifice offers a gentler transition - lower emissions with the reassurance of petrol backup when needed. As the UK moves toward its 2030 internal combustion engine phase-out, hybrids remain a popular stepping stone for those not quite ready to make the switch to a fully electric car.Salary sacrifice schemes make greener driving more affordable and tax-efficient. Employees exchange part of their pre-tax salary for a brand-new car, saving 20-50% compared to personal leasing, whether they choose a fully electric vehicle (EV) or a hybrid (HEV/PHEV).

But with recent Benefit-in-Kind (BiK) updates and upcoming Euro 6e-bis emissions standards, understanding the long-term cost difference between electric and hybrid salary sacrifice matters more than ever.

This guide compares EVs, hybrids, and personal leases, showing how electric cars can save drivers thousands across a three-year term. Hybrids still offer an attractive bridge for those who aren't ready to charge daily (or take the leap).

How Hybrid Salary Sacrifice Works

Hybrid salary sacrifice works exactly like electric car schemes: employees exchange part of their pre-tax salary for a leased car. Because the deduction happens before tax and National Insurance, you save significantly. Employers benefit too, through reduced National Insurance contributions and improved ESG credentials.

The key difference with hybrids? Benefit-in-Kind (BiK) tax rates. Hybrids, especially plug-in hybrids (PHEVs), emit more CO₂ than EVs, meaning the taxable value is higher.

Vehicle Type	CO₂ Emissions (g/km)	Electric Range	BiK Rate (2025/26)	Notes
Fully Electric (EV)	£0	200–400 miles	3%	Frozen until April 2028
PHEV (70+ mile range)	1–50	70+ miles	6%	e.g. BMW 330e, Mercedes C300e
PHEV (40–69 mile range)	1–50	40–69 miles	9%	e.g. Volvo XC60 Recharge
PHEV (30–39 mile range)	1–50	30–39 miles	13%	Older PHEVs and large SUVs
Self-Charging Hybrid (HEV)	90–150+	<2 miles	24–29%	e.g. Toyota RAV4 Hybrid

As you can see in the table above, from 2028, the picture changes. All vehicles emitting 1-50 g/km CO₂ (including most plug-in hybrids) will face BiK rates of 18-19%, while EVs remain low. This change is expected to eliminate most of the current financial advantage hybrids hold, to make pure-electric cars more desirable.

The Euro 6e-bis emissions test, taking effect in 2026, will add another layer of change. By measuring emissions more accurately under real-world driving conditions, many PHEVs are likely to be reclassified with higher CO₂ values, pushing them into more expensive BiK bands.

Types of Hybrid Cars Available

Not all hybrids are the same. Understanding the differences helps you decide whether hybrid salary sacrifice fits your needs or whether an EV offers better long-term value.

Self-Charging Hybrids (HEV)

These vehicles combine a small electric motor with a petrol engine, but can't be plugged in. They recharge through regenerative braking and engine use.

BiK: 24–29%
Typical Models: Toyota RAV4 Hybrid, Honda Civic e:HEV
Range: Usually <2 miles electric-only
Fuel Economy: 45–55 mpg

While more efficient than traditional petrol cars, HEVs don't qualify for lower BiK brackets and aren't available through The Electric Car Scheme because they offer limited environmental or tax advantages.

Plug-in Hybrids (PHEV)

**BiK:** 6-19%, depending on electric range
**Typical Models:** BMW 330e, Mercedes C300e, Volvo XC60 Recharge
**Charging:** Via home or public charger (Type 2 connector)

Source: Volvo Newsroom

Plug-in hybrids sit between petrol cars and full EVs. They feature a larger battery delivering 25-80 miles of electric-only range - ideal for daily commutes. When the battery runs flat, the petrol engine takes over.

For those who predominantly drive around town or a city with home charging, PHEVs can cover 50-70% of daily miles electrically. However, if you can’t charge regularly, this can quickly become expensive.

Range-Extended EVs (REX)

This is a slightly more niche category, incorporating electric drive with a small onboard petrol generator that charges the battery. Once popular in the early 2010s (like the BMW i3 REX), these are now rare as full EV range regularly exceeds 300 miles.

BiK: Typically 3-9% depending on CO₂ output
Best suited for: Drivers needing backup reassurance in areas with limited charging coverage

Cost Comparison: Hybrid vs EV

Let's look at real-world salary sacrifice costs over a four-year lease for 20% and 40% taxpayers.

Hybrid/EV: 40% Taxpayer

Vehicle	Type	Total 4-year cost	Savings over term compared to a personal lease
Tesla Model 3 (EV)	Electric	£21,456	£5,546
Vauxhall Astra 195 GS (PHEV)	Plug-in Hybrid	£32,976	£6,832

*The costs in this and the following tables are based on the following lease terms: 10,000 miles per annum, 4-year lease, flat payment profile, and are inclusive of service, maintenance, tyres, MOT & breakdown cover.

Family Car Salary Sacrifice: 20% Taxpayer

Vehicle	Type	4-Year Total Cost	Savings over term compared to a personal lease
Nissan Ariya (EV)	Electric	£16,176	£4,609
Toyota Prius PHEV	Plug-in Hybrid	£24,720	£3,664

Fuel Cost Comparison (10,000 miles/year)

Vehicle	Type	4-Year Total Cost	Savings over term compared to a personal lease
Nissan Ariya (EV)	Electric	£16,176	£4,609
Toyota Prius PHEV	Plug-in Hybrid	£24,720	£3,664

Maintenance Cost Comparison

Vehicle Type	Annual Maintenance Cost	Notes
EV	£100-£230	Fewer moving parts; regenerative braking reduces wear
Hybrid (PHEV/HEV)	£300-£500	Two systems (engine + electric) increase servicing complexity

Over three years, EV drivers typically save:

£4,785 vs plug-in hybrids
£6,954 vs self-charging hybrids
£7,000-£8,000 vs personal leases

Who Should Consider Hybrid Salary Sacrifice

While EVs offer stronger long-term value, hybrids remain a practical transitional option for some drivers.

For Transition-Hesitant Employees

If you're concerned about charging availability or range, hybrids offer peace of mind. Paying £2,000-£4,000 more over four years might be worth it while you build confidence and infrastructure improves.

For High-Mileage or Rural Drivers

Employees covering 150+ miles daily with unpredictable routes, or those without home charging, may find PHEVs practical. However, it’s important to bear in mind that if you're not charging regularly, they effectively become expensive petrol cars with higher running costs and BiK tax.

For Companies with Mixed Fleet Needs

Offering hybrids alongside EVs can boost participation from 15-20% to 40-50% of eligible employees. It's a practical approach while waiting for workplace chargers or regional infrastructure improvements.

The Business Case for Mixed Fleet Solutions

For many employers, success comes from flexibility, not forcing everyone down the same path. A mixed EV and hybrid salary sacrifice scheme encourages wider uptake and smoother transitions.

Maximising Participation

Scheme Type	Typical Employee Uptake	Notes
EV-only Scheme	15-20%	Limited by charging access
EV + Hybrid Scheme	40-50%	Broader accessibility and choice

Providing both options helps businesses reach ESG targets faster while keeping employees satisfied.

Tiered Approach

As a company looking to implement a salary sacrifice car scheme, you may choose to follow a tiered approach

EVs as Default: Encourage all employees to consider fully electric models first
Hybrids as Transitional: Offer for employees awaiting home or workplace charging
Planned Transition: At renewal, drivers can switch to EVs easily

This transparent, inclusive approach reflects responsible change management, supporting your business case while keeping sustainability goals on track.

Employee Satisfaction

Choice increases the value employees see in the scheme. People appreciate being trusted to select what fits their lifestyle, reducing resistance and encouraging long-term engagement.

ESG and Net Zero Strategy

Even a mixed fleet dramatically reduces emissions compared to traditional petrol or diesel equivalents. Demonstrating measurable progress toward Net Zero helps companies meet internal and external sustainability reporting requirements.

Making the Switch: Hybrid to EV Transition

For many PHEV drivers, hybrids become stepping stones toward full electrification.

When to Upgrade: As PHEV drivers become more comfortable with charging, they’re likely to fill their car up less. At that point, switching to a full EV makes financial sense.
2028 BiK Convergence: When hybrid BiK rates rise to 18-19%, the cost gap with EVs will become too significant to ignore.
The Electric Car Scheme Flexibility: With built-in renewal pathways, employees can upgrade early from PHEV to EV as their confidence and charging access improve.

Year	Key Change	Impact
2026	Euro 6e-bis emissions testing	Reclassifies many hybrids with higher BiK
2028	BiK jump for 1–50 g/km cars	Hybrids become 5–6x costlier to tax than EVs
2030	ICE sales ban	Residual values for hybrids decline
2032+	EV range >400 miles is common	Eliminates range anxiety entirely

Choosing between hybrid and electric salary sacrifice ultimately depends on your readiness, charging access, and driving patterns.

For most employees, EVs are now the clear financial and environmental winner, saving thousands in BiK and fuel over four years. Hybrids, however, remain an important part of the transition for those still building confidence or who are waiting for charging access.

As the UK moves toward 2028 and beyond, the financial case for EVs will only strengthen. Businesses offering a mixed fleet today can engage more staff, demonstrate sustainability leadership, and prepare smoothly for a fully electric future - learn more about The Electric Car Scheme today.

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