1. What is EV Salary Sacrifice?

Electric Vehicle (EV) salary sacrifice is a UK scheme where employees give up part of their salary in exchange for an electric car. This reduces taxable income, potentially lowering income tax and National Insurance contributions.

2. How Net Pay is Calculated

The calculator uses the following formula:

Where:

• Gross Pay — Your annual salary before deductions
• Income Tax — Calculated based on your tax bracket
• National Insurance — Contributions based on your earnings
• Salary Sacrifice Amount — Annual cost of the electric vehicle

3. Benefits of Salary Sacrifice

Details: EV salary sacrifice can provide significant tax savings, lower benefit-in-kind (BIK) rates for electric vehicles, and often includes maintenance, insurance, and breakdown cover.

4. Using the Calculator

Tips: Enter your gross annual salary, estimated income tax, National Insurance contributions, and the annual cost of the EV through salary sacrifice. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with EV salary sacrifice?
A: Savings vary but typically range from 30-60% compared to personal leasing due to tax and NI savings.

Q2: What happens if I leave my job?
A: The car typically must be returned, though some schemes offer early termination options.

Q3: Are all electric vehicles eligible?
A: Most pure EVs qualify, but PHEVs and hybrids may have different BIK rates.

Q4: Does it affect my pension?
A: Salary sacrifice can affect pension contributions, though many employers make adjustments to mitigate this.

Q5: What's included in the salary sacrifice amount?
A: Typically includes the car lease, insurance, maintenance, and breakdown cover - check with your employer.