Salary sacrifice for electric cars is one of the most tax-efficient ways to get a Tesla in the UK right now. The ultra-low 3% BIK (Benefit in Kind) rate for EVs in 2025/26, combined with income tax and National Insurance savings, means a basic-rate taxpayer can save 25–30% of the monthly lease cost and a higher-rate taxpayer can save 35–40%. The savings are substantial — but the scheme is not available to everyone.
What is salary sacrifice for an electric car?
Salary sacrifice is an arrangement between you and your employer. You agree to give up a portion of your gross salary in exchange for a benefit — in this case, a company car leased and insured by your employer. Because the sacrifice comes from your gross pay (before tax and NI), you pay less income tax and National Insurance on that portion of your salary.
For electric vehicles, salary sacrifice is exceptionally attractive because the Benefit in Kind (BIK) tax you pay on the car is extremely low: just 3% of the car's P11D value in 2025/26. Compare this to a petrol company car which typically attracts 25–37% BIK.
Your employer leases the car, handles insurance and servicing, and deducts the gross cost from your salary before tax. You get a brand-new Tesla, insurance and maintenance included, at an effective cost significantly lower than leasing personally.
How much can you save on a Tesla through salary sacrifice?
Let's work through a concrete example. A basic-rate taxpayer on a £45,000 salary taking a Tesla Model Y Long Range (P11D value: £51,490):
| Item | Amount |
|---|---|
| Gross monthly sacrifice (lease + insurance + servicing) | ~£650/month |
| Income tax saving (20% basic rate on £650) | −£130/month |
| Employee NI saving (8% on £650) | −£52/month |
| BIK tax payable (3% × £51,490 × 20% ÷ 12) | +£26/month |
| Net effective monthly cost | ~£494/month |
| Equivalent personal lease (no tax saving) | ~£680–£730/month |
| Monthly saving vs personal lease | ~£186–£236/month |
For a higher-rate taxpayer (40% income tax) the savings are even larger: the same car's effective net monthly cost would be closer to £415–£430/month — a saving of £250–£300/month vs a personal lease.
These figures are illustrative. Your actual saving depends on your salary, tax band, the specific lease quote from your employer's fleet provider and the BIK rate applicable in the relevant tax year.
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Calculate your salary sacrifice savings →What is the BIK rate for Tesla in the UK?
All fully electric vehicles — including every Tesla model — are taxed at the EV BIK rate rather than the standard company car rate. The confirmed EV BIK rates are:
| Tax year | BIK rate (EV) | BIK tax/year (higher rate, Model Y LR) |
|---|---|---|
| 2025/26 | 2% | £412 |
| 2026/27 | 3% | £617 |
| 2027/28 | 4% | £823 |
| 2028/29 | 5% | £1,030 |
| 2029/30 | 6% | £1,236 |
Even at 5% in 2028/29, the EV BIK rate is a fraction of the 25–37% applied to petrol and diesel company cars. The low BIK is what makes salary sacrifice for EVs so compelling — the BIK tax you pay is minimal relative to the income tax and NI savings.
Who is eligible for salary sacrifice?
Salary sacrifice is only available through an employer. You need:
- An employer who offers an EV salary sacrifice scheme. Not all employers do. Ask your HR or benefits team. Many larger employers use fleet management companies such as Tusker, LeasePlan, Octopus EV or Alphabet to administer their scheme.
- Your salary after sacrifice must not fall below National Minimum Wage. This restricts the benefit for lower-paid employees.
- You must be a permanent employee (most schemes exclude contractors, agency workers and zero-hours employees).
- Your employer must agree to the arrangement. Salary sacrifice is a contract variation and both parties must consent.
How does salary sacrifice compare to PCP or buying outright?
| Method | Typical effective monthly cost | Pros | Cons |
|---|---|---|---|
| Salary sacrifice | £400–£500 (basic rate) | Tax & NI savings; insurance & servicing included; no capital tied up | Employer-dependent; mileage limits; no ownership |
| Personal lease (PCP) | £600–£750 | Fixed monthly costs; no depreciation risk | No tax saving; balloon payment or return at end |
| Buy outright / HP | £800–£1,000 (equiv. incl. depreciation) | Ownership; no mileage limits | Large upfront cost; depreciation risk; maintenance costs |
For employees with access to a scheme, salary sacrifice is almost always the lowest effective cost option for a new Tesla — especially for higher-rate taxpayers.
Step-by-step: how to get a Tesla through salary sacrifice
- Check if your employer offers the scheme. Speak to HR or your benefits administrator. Ask which fleet provider they use.
- Get a quote through the fleet provider. The provider's online portal will show available Tesla models with their monthly gross sacrifice amount. This usually includes insurance, servicing and tyres.
- Check your net cost. Use our salary sacrifice calculator to see your tax saving and actual out-of-pocket monthly cost.
- Order through your employer. Your employer places the lease order. You sign a salary sacrifice agreement (a change to your employment contract).
- Delivery. The car is delivered, usually within 3–16 weeks depending on model availability. Your salary deduction starts from the month following delivery.
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Order with referral link →Important disclaimer: This article is for informational purposes only. Tax savings depend on your individual circumstances, including your salary, tax band, and the specific scheme terms offered by your employer. The BIK rates and tax thresholds referenced are based on HMRC guidance current as of February 2026 and are subject to change. Always consult your employer's HR or benefits team and consider seeking professional tax advice before making financial decisions.
Frequently asked questions
Does salary sacrifice affect my pension contributions?
It can. Because salary sacrifice reduces your gross salary, employer and employee pension contributions calculated as a percentage of salary may also reduce. Some employers "gross up" pension contributions to avoid this — check your scheme rules. Your State Pension entitlement is not normally affected unless your salary drops below the Lower Earnings Limit (£6,396 for 2025/26).
Can I use a referral link when ordering through salary sacrifice?
This depends on your employer's fleet provider. In some schemes the car is ordered directly by the fleet company and you may not be able to apply a personal referral link. It is worth asking your fleet provider — some do accommodate referral benefits.
What happens at the end of the salary sacrifice lease?
The car is returned to the fleet provider. Your salary returns to its original level. If you want to continue with an EV, you can start a new salary sacrifice agreement. Some providers offer the option to purchase the car at its residual value (Guaranteed Future Value) at the end of the lease.
Is salary sacrifice better than buying a Tesla on PCP?
For most employees with access to a scheme, yes — especially higher-rate taxpayers. The combined income tax and NI savings typically reduce the effective monthly cost by 32–42% compared to the gross lease cost, making it cheaper than a comparable personal PCP or lease. The trade-off is no ownership and mileage restrictions.