A higher-rate taxpayer who takes a £40,000 electric car through salary sacrifice pays £378.13 a month for it in 2026-27. The same car on a personal lease, with the same cover, costs £655. That is a saving of £276.87 a month, or £3,322 a year. The Budget's 1-point company car tax rise in 2030-31 takes £13.33 a month off it, and salary sacrifice still comes out ahead at every tax band, car price and year we modelled.
By the EV Cable Hub Research Team. Data: EV Cable Hub salary sacrifice model using HMRC BIK rates and Autumn Budget 2026 measures, and the Budget 2026 Driver Survey of 1,214 EV and PHEV drivers. Last updated November 2026. How we worked this out
Key findings
- On a £40,000 EV in 2026-27, salary sacrifice saves £2,702 a year at basic rate, £3,322 at higher rate and £3,578 at additional rate against a personal lease.
- Earners between £100,000 and £125,140 save the most: £362.20 a month, because the sacrifice wins back personal allowance.
- The 2030-31 rise from 9% to 10% BIK costs £6.67, £13.33 or £15.00 a month by tax band. It is 16.7% of the total fall in savings to 2030-31; rates set before the Budget account for the rest.
- Even in 2030-31 the £40,000 EV still saves £185.13 to £208.20 a month. Over five years the saving totals £12,308 to £15,192.
- eVED from April 2028 adds a modelled £18.50 a month to the rental at 7,400 miles, which costs a higher-rate driver £10.73 after tax relief.
- 23% of employed EV and PHEV drivers in our survey have their car through salary sacrifice.
| Line | Basic rate | Higher rate | Additional rate |
|---|---|---|---|
| Gross monthly sacrifice | £560.00 | £560.00 | £560.00 |
| Combined income tax and NI relief | 28% | 42% | 47% |
| Tax and NI saved each month | £156.80 | £235.20 | £263.20 |
| Company car tax each month (4% BIK) | £26.67 | £53.33 | £60.00 |
| Net monthly cost of the car | £429.87 | £378.13 | £356.80 |
| Personal lease, same car and cover | £655.00 | £655.00 | £655.00 |
| Monthly saving | £225.13 | £276.87 | £298.20 |
| Annual saving | £2,702 | £3,322 | £3,578 |
| Rest of UK tax bands. Excludes charging and eVED. Source: EV Cable Hub salary sacrifice model, November 2026. | |||
How salary sacrifice works out cheaper
Your employer leases the car and you give up £560 of gross salary each month to cover it. Because that money comes off before tax, you skip the income tax and employee National Insurance on it: 28p in every pound at basic rate, 42p at higher rate. The catch is company car tax on the car's list price, and for an EV that is only 4% in 2026-27. On a £40,000 car that is £1,600 of taxable benefit a year.
A personal lease is paid from what is left after tax. That is the whole gap.
What you save at every tax band
Saving against a £655 personal lease. Source: EV Cable Hub salary sacrifice model, November 2026.
The taper zone wins because every £2 of income over £100,000 removes £1 of personal allowance, an effective 60% income tax rate. Sacrificing salary there brings the allowance back. In Scotland the same zone saves £394.20 a month, and Scottish higher-rate taxpayers earning between £43,663 and £50,270 save £319.00, more than anyone else below six figures, because they pay 42% income tax and full 8% NI.
One floor applies to everyone: pay after the sacrifice cannot drop below the National Living Wage. At £12.71 an hour for 37.5 hours, sacrificing £560 a month needs gross pay of at least £31,504.50.
What the Budget changed, and what it did not
The 28 October 2026 Budget added 1 point to company car tax in 2030-31, taking EVs from 9% to 10%. It left the tax and NI relief at the core of salary sacrifice alone. The bigger squeeze was already scheduled: EV rates climb from 4% now to 9% by 2029-30, and that accounts for five-sixths of the fall in savings.
| Car type | 2025-26 | 2026-27 | 2027-28 | 2028-29 | 2029-30 | 2030-31 |
|---|---|---|---|---|---|---|
| Electric (0g/km) | 3% | 4% | 5% | 7% | 9% | 10% |
| PHEV, 130+ miles electric range | 3% | 4% | 5% | 18% | 19% | 20% |
| PHEV, 40 to 69 miles | 9% | 10% | 11% | 18% | 19% | 20% |
| PHEV, under 30 miles | 15% | 16% | 17% | 18% | 19% | 20% |
| Petrol, 130 to 134g/km | 31% | 32% | 33% | 34% | 35% | 36% |
| Source: HMRC published rates; Autumn Budget, 28 October 2026. | ||||||
Plug-in hybrids take the hardest hit. From 2028-29 every PHEV pays 18%, so a £40,000 PHEV with 40 to 69 miles of range saves a higher-rate driver £196.87 a month now but only £90.20 in 2028-29, against £236.87 for the equivalent EV. A £40,000 petrol company car costs a higher-rate taxpayer £426.67 a month in company car tax this year, eight times the EV's £53.33.
Savings year by year to 2030-31
| Tax year | BIK rate | Basic rate | Higher rate | Additional rate |
|---|---|---|---|---|
| 2026-27 | 4% | £225.13 | £276.87 | £298.20 |
| 2027-28 | 5% | £218.47 | £263.53 | £283.20 |
| 2028-29 | 7% | £205.13 | £236.87 | £253.20 |
| 2029-30 | 9% | £191.80 | £210.20 | £223.20 |
| 2030-31 | 10% | £185.13 | £196.87 | £208.20 |
| Five-year total | £12,308 | £14,212 | £15,192 | |
| Against a £655 personal lease, £560 gross sacrifice, excluding eVED and charging. Source: EV Cable Hub salary sacrifice model, November 2026. | ||||
Higher earners lose more of the saving as BIK rises, 28.9% at higher rate and 30.2% at additional rate, against 17.8% for basic-rate drivers. Each extra point of BIK is taxed at their higher rate.
Bigger cars save more
| List price | Gross sacrifice | Personal lease | Basic rate | Higher rate | Additional rate |
|---|---|---|---|---|---|
| £30,000 | £430 | £505 | £175.40 | £215.60 | £232.10 |
| £40,000 | £560 | £655 | £225.13 | £276.87 | £298.20 |
| £50,000 | £690 | £805 | £274.87 | £338.13 | £364.30 |
| £60,000 | £820 | £955 | £324.60 | £399.40 | £430.40 |
| Net monthly saving against a personal lease of the same car, 4% BIK. Source: EV Cable Hub salary sacrifice model, November 2026. | |||||
The saving scales with the lease, because the relief is a percentage of what you sacrifice.
eVED inside salary sacrifice
From April 2028 eVED charges 3p a mile, billed to the registered keeper. On a salary sacrifice car that is the leasing company, and we expect it to pass the cost through the rental: £18.50 a month at 7,400 miles. Because it comes out of gross pay, a basic-rate driver pays £13.32 of that, a higher-rate driver £10.73 and an additional-rate driver £9.81. A private owner pays the full £18.50. In our survey, 61% of salary sacrifice drivers did not know eVED would reach them at all. Our eVED calculator works out your own figure.
How we worked this out
The model uses a £560 gross monthly sacrifice for a £40,000 EV against a £655 personal lease of the same car with the same cover, scaled for other list prices. Relief is income tax plus employee NI at 2026-27 rates for the rest of the UK, with Scottish bands modelled separately. Company car tax uses HMRC BIK rates, including the 2030-31 rise in the Autumn Budget of 28 October 2026, at a constant list price. eVED is modelled at 3p a mile from April 2028 and passed through in full. The survey questioned 1,214 EV and PHEV drivers after the Budget, 219 of them on salary sacrifice.
EV salary sacrifice: your questions answered
How much do you save with EV salary sacrifice in 2026?
A £40,000 electric car on salary sacrifice saves £225.13 a month for a basic-rate taxpayer, £276.87 for a higher-rate taxpayer and £298.20 for an additional-rate taxpayer in 2026-27, compared with a personal lease of the same car with the same cover.
What did the Autumn Budget 2026 change for EV salary sacrifice?
The 28 October 2026 Budget raised company car tax by 1 point in 2030-31, taking EVs from 9% to 10%. On a £40,000 EV that costs £80, £160 or £180 a year depending on tax band. The scheme's core tax and NI relief was not changed.
What is the BIK rate for electric cars in 2026-27?
4% in 2026-27, rising to 5% in 2027-28, 7% in 2028-29, 9% in 2029-30 and 10% in 2030-31. On a £40,000 EV, 4% gives a taxable benefit of £1,600 a year.
Is EV salary sacrifice still worth it after the 2026 Budget?
Yes, at every tax band on our modelling. Even in 2030-31, after all scheduled rises, a £40,000 EV saves £185.13 (basic), £196.87 (higher) or £208.20 (additional) a month against a personal lease.
Who pays eVED on a salary sacrifice car?
eVED is charged to the registered keeper, which is the leasing company. We model it passing through the rental at £18.50 a month at 7,400 miles; after tax relief that costs a higher-rate driver £10.73 a month.
Can I do salary sacrifice on a low salary?
Only if your pay after the sacrifice stays above the National Living Wage. In 2026-27, at £12.71 an hour for 37.5 hours a week, a full-time employee needs gross pay of at least £31,504.50 to sacrifice £560 a month.
Is a plug-in hybrid on salary sacrifice still worth it?
Much less so from 2028-29. A £40,000 PHEV with 40 to 69 miles of range saves a higher-rate taxpayer £196.87 a month in 2026-27, but only £90.20 in 2028-29 when PHEVs move to an 18% BIK rate, against £236.87 for an equivalent EV.
A plain-text Markdown copy of this article, with every figure, table and source, for AI agents and analysts.
Free to reuse with a followed link to this page. Research licence
