Electric car salary sacrifice is one of the most cost-effective employee benefits available to UK businesses right now. With pure electric vehicles attracting a Benefit-in-Kind rate of just 4% for 2026/27 — rising gradually but remaining well below petrol and diesel rates through to 2030 — the tax conditions for both employees and employers have never been more favourable.
At Lincoln Vehicle Solutions, we help businesses of all sizes offer a fully managed EV salary sacrifice scheme. There's no cost to your business to set up, no minimum employee headcount, and no ongoing admin burden on your team. Your employees save between 20% and 40% on a brand-new electric vehicle compared to leasing personally. Your business reduces its Class 1 National Insurance contributions. And we handle everything in between.
Based in Lincoln and working with businesses across Lincolnshire and the wider UK, we offer a genuinely personal, independent service — one point of contact, straight answers, and a scheme set up properly from day one.
Electric car salary sacrifice is a HMRC-approved arrangement where an employee agrees to give up a portion of their gross salary in exchange for a brand-new electric vehicle. Because the deduction happens before income tax and National Insurance are calculated, employees make significant savings on the true cost of the car — without touching their take-home pay nearly as much as you'd expect.
For employers, the benefit is equally compelling. By reducing employees' gross salaries, the business lowers the salary base on which Class 1 National Insurance contributions are calculated — generating real, recurring savings on your payroll costs.
It's one of the few employee benefits that genuinely costs the business less than it gives.
Getting started is straightforward. Here's how the process works:
There's no complexity left for you to figure out alone. We handle the scheme administration; you focus on running your business.
The savings from salary sacrifice come from three places at once: income tax, National Insurance, and — for higher rate taxpayers especially — the combination is significant.
Here's how the numbers look for a £400/month gross sacrifice on a typical electric vehicle:
| Basic Rate Taxpayer (20%) | Higher Rate Taxpayer (40%) | |
| Gross salary sacrifice | £400/month | £400/month |
| Income tax saved | £80/month | £160/month |
| Employee NI saved | £32/month | £32/month |
| BIK tax payable (4% rate) | ~£15/month | ~£30/month |
| Net monthly cost | ~£303/month | ~£238/month |
| Saving vs. personal lease | ~24% | ~40% |
Figures are illustrative. Based on a £35,000 P11D vehicle, 4% BIK rate for 2026/27. Individual savings will vary depending on salary, vehicle choice, and personal tax position.
For a higher rate taxpayer, that's a saving of over £1,900 per year on a single vehicle — simply by restructuring how the cost is paid. And because the deduction comes from gross salary, employees receive a brand-new, fully insured and maintained car for a net cost that often surprises them.
The UK jobs market remains competitive. Salary alone is no longer enough to attract and retain the people you want. An EV salary sacrifice scheme gives your business a genuine, tangible benefit to offer — one that employees actually notice and value.
Reduce your National Insurance bill Every participating employee reduces the salary base on which you pay Class 1 NI contributions. For businesses with multiple participants, this produces meaningful annual savings that compound over time.
Attract and retain the people you want A well-structured benefits package signals that you invest in your team. EV salary sacrifice is visible, modern, and genuinely valuable — exactly the kind of benefit that influences hiring decisions.
Improve employee satisfaction and morale Financial wellbeing is a growing priority for employees. Giving your team access to a brand-new, fully insured and maintained electric vehicle — at a cost well below the market rate — has a real, positive impact on how they feel about working for you.
Support your ESG and sustainability commitments Transitioning employees out of older, higher-emission grey fleet vehicles and into new EVs directly reduces your organisation's carbon footprint. For businesses with ESG reporting obligations or sustainability targets, this is a meaningful and demonstrable contribution.
HR benefits at a glance:
Financial benefits at a glance:
Your employees give up a portion of their gross salary — but because that deduction happens before income tax and National Insurance are calculated, the real-terms cost is far lower than the headline figure suggests. A basic rate taxpayer saves around 24%. A higher rate taxpayer can save 40% or more. And everything is bundled in.
Here's what's included for every employee on the scheme:
For many employees, this is the most affordable route to a brand-new car they'll ever find.
When you offer EV salary sacrifice through Lincoln Vehicle Solutions, the scheme is fully administered on your behalf. There's no internal fleet management burden, no complex procurement process, and no ongoing administrative overhead for your team.
Every vehicle on the scheme includes:
EV salary sacrifice works for businesses of most sizes and structures. It's particularly well-suited to businesses that:
The scheme must not reduce an employee's cash earnings below the National Minimum Wage — we'll advise on how to structure this correctly for your workforce.
Lincoln Vehicle Solutions is an independent vehicle leasing broker based in Lincoln, operating as an appointed representative within the automotive finance space. We work with a panel of leading lease funders to secure competitive pricing — and we're not tied to a single provider.
That means you get:
We're local, independent, and commercially focused. If you want a scheme that's set up properly and supported throughout, we'd like to talk.
Whether you're ready to launch a scheme or just want to understand what's involved, we're happy to have a straightforward conversation.
Get in touch with Lincoln Vehicle Solutions today.
Most UK businesses that employ staff on a PAYE basis are eligible to offer a salary sacrifice scheme. There's no minimum headcount requirement, so smaller businesses can participate just as larger ones can. The key requirement is that the salary sacrifice arrangement must not reduce any employee's cash earnings below the National Minimum Wage — something we'll help you structure correctly from the outset.
It can, because salary sacrifice reduces an employee's gross salary. This may have an impact on entitlements that are calculated on the basis of earnings, such as mortgage affordability assessments, statutory maternity or paternity pay, and pension contributions — depending on how the pension scheme is structured. Employees should be made aware of this before they agree to participate, and we'd recommend encouraging them to take independent financial advice if they have concerns.
This is one of the most common questions from employers and it's worth addressing early in the planning process. The scheme includes protection for unforeseen circumstances, and we'll talk you through how early termination situations are handled as part of setting up your arrangement.
No. Every vehicle on the scheme comes with fully comprehensive insurance included, covering both personal and business use. Employees don't need to arrange their own cover.
Employees can select from a wide range of electric vehicles across all major manufacturers. We'll work with each employee to find a vehicle that suits their needs and falls within the parameters of your scheme.
Setup timelines vary depending on the size of your business and the number of employees involved, but we'll guide you through every step and keep things moving as efficiently as possible. Once the scheme is in place, onboarding additional employees is straightforward.
No. Even a single employee can benefit from the scheme, making it viable for smaller businesses as well as larger organisations.
At the end of the agreed lease term, the employee simply returns the vehicle. They then have the option to select a new electric vehicle and start a fresh agreement, keeping them in a new car on an ongoing basis.
Setting up the scheme itself does not typically carry a direct cost to the employer. The scheme is funded through the salary sacrifice deductions made by participating employees. We'll be transparent about how everything works before you commit to anything.
Simply fill in the enquiry form on this page and we'll be in touch to arrange a callback at a time that suits you. We'll talk through your business, your workforce, and what a scheme could look like in practice — with no obligation to proceed.