What Does a Salary Sacrifice Electric Car Really Cost? (2026/27)
Written by James Whitfield · Last reviewed 19 October 2026 · Checked against HMRC rates for 2026/27.
Scheme quotes show a gross monthly figure, such as £400. What leaves your bank account is less, because the sacrifice comes off your pay before tax and National Insurance, but more than the tax saving alone suggests, because you also pay benefit-in-kind tax on the car. Here is the real cost at six salaries.
On a £70,000 salary, a £400 a month sacrifice for an electric car with a £40,000 list price costs about £285 a month of take-home pay: £400, less £160 Income Tax and £8 NI saved, plus £53 of benefit-in-kind tax at the 2026/27 rate of 4%.134 A basic-rate taxpayer pays about £315 a month for the same car.
- Benefit-in-kind rate for a zero-emission car: 4% of list price in 2026/27, after 3% in 2025/26.1
- It then rises to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30.56
- Cars emitting no more than 75g/km of CO2 are taxed on the normal car benefit under salary sacrifice, not on the salary given up.2
- The sacrifice saves Income Tax at your top rate and employee NI at 8% or 2%; employer NI is 15%, and employers pay 15% Class 1A NI on the car benefit.34
- The April 2029 £2,000 NI cap is for pension sacrifice and does not apply to cars.
Need more than pensions? Get all 7 tax packs in the Tax Pack Library — £9.99
How the monthly cost is worked out
- Sacrifice: your gross pay falls by the monthly amount, here £400 (£4,800 a year).
- Tax and NI saved: Income Tax at your top rate and employee NI at 8% (or 2% above £50,270) on that £4,800.34
- Benefit-in-kind tax added back: list price × 4% = £1,600 a year of taxable benefit on a £40,000 car, taxed at your rate. There is no employee NI on it.14
- Net cost = sacrifice − tax saved − NI saved + benefit-in-kind tax.
£400 a month at six salaries
| Salary | Tax saved | NI saved | BiK tax | Net a year | Net a month |
|---|---|---|---|---|---|
| £30,000 | £960 | £384 | £320 | £3,776 | £314.67 |
| £45,000 | £960 | £384 | £320 | £3,776 | £314.67 |
| £55,000 | £1,906 | £100.20 | £626 | £3,419.80 | £284.98 |
| £70,000 | £1,920 | £96 | £640 | £3,424 | £285.33 |
| £110,000 | £2,880 | £96 | £960 | £2,784 | £232.00 |
| £150,000 | £2,160 | £96 | £720 | £3,264 | £272.00 |
£4,800 a year gross sacrifice, £40,000 list price, 4% BiK, 2026/27 England, Wales and Northern Ireland rates, no other income or benefits.134 At £55,000 the sacrifice straddles £50,270, so £70 of it saves 20% tax and 8% NI. At £110,000 both the sacrifice and the car benefit sit in the £100,000 to £125,140 band, where the effective rate is 60%.
The pattern: higher-rate taxpayers pay about £30 a month less than basic-rate taxpayers for the same car, and earners between £100,000 and £125,140 pay least of all. Above £125,140 the saving is 45% plus 2% NI.
Worked example: £70,000 salary, £400 a month
| Gross sacrifice: £400 × 12 | £4,800 |
| Income Tax saved: £4,800 × 40% | −£1,920 |
| Employee NI saved: £4,800 × 2% | −£96 |
| Benefit in kind: £40,000 × 4% = £1,600, taxed at 40% | +£640 |
| Net cost a year (about £285.33 a month) | £3,424 |
Your employer saves £720 of employer NI on the sacrifice and pays £240 of Class 1A NI on the £1,600 benefit, a net saving of £480.4 Some employers reflect part of that in the monthly price.
What happens when the BiK rate rises
The same car and salary cost more each year as the percentage climbs, even if the monthly sacrifice stays the same. For the £70,000 earner above:
| Tax year | BiK rate | Taxable benefit | Net a month |
|---|---|---|---|
| 2026/27 | 4% | £1,600 | £285.33 |
| 2027/28 | 5% | £2,000 | £298.67 |
| 2028/29 | 7% | £2,800 | £325.33 |
| 2029/30 | 9% | £3,600 | £352.00 |
BiK percentages from HMRC and the published company car tax rates.156 Uses 2026/27 tax and NI rates for every year to isolate the BiK change. Most car schemes last two to four years, so check which years yours covers.
Before you sign up
- Use the list price on the quote, not the discounted price, for the benefit-in-kind figure.
- Check what the monthly figure includes, such as insurance and maintenance, and what happens if you leave the job or go on parental leave.
- Check the minimum wage floor: no sacrifice can take your cash pay below it.2
- Think about borrowing: lenders may use your lower salary; see salary sacrifice and mortgages.
Put in your own car and salary with the electric car salary sacrifice calculator, read how EV salary sacrifice works, or compare it with a car loan.
Frequently asked questions
How much does a £400 a month salary sacrifice car cost on £70,000?
About £285 a month. The £4,800 a year sacrifice saves £1,920 Income Tax (40%) and £96 NI (2%), and the car adds £640 a year of benefit-in-kind tax on a £40,000 list price at 4%. Net cost: £3,424 a year.
Why do basic-rate taxpayers pay more for the same car?
Their tax saving is 20% rather than 40%. On £400 a month a basic-rate taxpayer saves £960 tax and £384 NI and pays £320 benefit-in-kind tax, so the net cost is about £315 a month, against about £285 for a higher-rate taxpayer.
What is the benefit-in-kind rate on an electric car?
4% of the list price in 2026/27, then 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30. On a £40,000 car that is a taxable benefit of £1,600 a year in 2026/27.
Does the 2029 £2,000 NI cap apply to car salary sacrifice?
No. The April 2029 cap applies to pension contributions made through salary sacrifice. Electric car schemes are not part of that change.
Does a plug-in hybrid get the same treatment?
Only cars emitting no more than 75g/km of CO2 are always taxed on the normal car benefit under salary sacrifice. In 2026/27 plug-in hybrids emitting 1 to 50g/km are taxed at 4% to 16% of list price depending on their electric range, against 4% for a fully electric car.
This guide is general information, not financial or tax advice. Figures are estimates for a fully electric car and assume no other income; Scottish rates differ.
Sources & references
Every headline figure in this guide is checked against the official HMRC and GOV.UK pages below and reflects the confirmed 2026/27 tax year. Each link opens the relevant official page in a new tab.
- HMRC EIM24705: car benefit appropriate percentages ↗ https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim24705
- Salary sacrifice and the effects on PAYE (HMRC) ↗ https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye
- Income Tax rates and Personal Allowances ↗ https://www.gov.uk/income-tax-rates
- National Insurance rates and categories ↗ https://www.gov.uk/national-insurance-rates-letters
- Company car tax rules 2025 to 2028 ↗ https://www.gov.uk/government/publications/company-car-tax-rules-2025-to-2028
- Income Tax: company car tax rates 2028 to 2030 ↗ https://www.gov.uk/government/publications/income-tax-company-car-tax-rates-2028-to-2030