Four per cent. That single figure is the whole game in 2026. HMRC’s published benefit-in-kind schedule, which now runs through to 2029/30, sets the company-car tax on a pure electric car at just 4% of its list price for the 2026/27 tax year — and the rate is fixed years in advance (the worked detail is laid out clearly by SalaryTax UK). That is the reason a higher-rate taxpayer can drive a brand-new electric car off a sacrificed slice of gross salary and still end up paying less per month than they would on the equivalent personal lease. Everything else in this piece hangs off that number.
I want to be clear about my angle from the start: salary sacrifice is the single best way to get into an EV in Britain right now, but the saving is not evenly spread, and the window where it looks this good is already closing. If you are going to do it, 2026 is the year to commit — with your eyes open about what 2028 does to the maths.
Why the 4% rate changes everything (salary sacrifice cars)
Company car tax used to be a punishment. On a petrol car you can still be taxed on a quarter or a third of the list price as a taxable benefit. EVs sit in a different universe: 4% for 2026/27, then a gentle climb the Treasury has signposted years in advance — 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30. Even at the top of that ladder, a 9% benefit charge is a fraction of what an internal-combustion car costs you in tax.
What that low BiK does is protect the saving. In a salary sacrifice arrangement you give up gross pay — pre-tax, pre-National Insurance — in exchange for the car. You dodge income tax and employee National Insurance on the sacrificed amount, and the only tax you pay back is the benefit-in-kind charge on the car. When that charge is 4%, almost the entire tax-and-NI saving stays in your pocket. That is the mechanism, and it is why the running-cost comparisons consistently land EVs on salary sacrifice somewhere between 20% and 50% cheaper than a personal lease on the same car.
“Maximise the saving” is really a question about your tax band
Here is the part nobody frames clearly enough. The percentage you save is driven less by which car you pick and more by which tax band you sit in. A 40% taxpayer is sacrificing salary that would otherwise be taxed at 40% plus 2% employee NI; a basic-rate earner is only escaping 20% plus 8%. So the higher up the tax scale you are, the more violent the saving — the top of that 20–50% range is essentially reserved for higher and additional-rate taxpayers.
If you are a 40% taxpayer, this is close to a no-brainer and I would not hesitate. If you are a basic-rate earner, the case is still good, but it is a more ordinary “decent deal on a lease” rather than the eye-watering numbers your higher-earning colleagues will quote at you. Set your expectations by your payslip, not by the headline.
The cars that actually do the heavy lifting
The temptation is to chase the lowest list price, but that is the wrong instinct. The saving maximises on a car you would genuinely run anyway — one with the range, the build and the resale story to justify the monthly outlay. Three cars frame the whole spread for 2026/27, and the figures below come from The Electric Car Scheme’s own worked examples for a 40% taxpayer in the 2026/27 tax year. Treat them as illustrative: your actual monthly cost depends on your salary, your employer’s specific scheme and the lease terms agreed, and these are not a quote or a finance offer.
| Car | Indicative cost (40% taxpayer, 2026/27) | Who it suits |
|---|---|---|
| Renault 5 | £248–£296 a month | City driver or second car |
| MG4 | Around £320 a month | The sensible only-car default |
| Tesla Model 3 | About £441 a month | Widest saving versus a personal lease |
| Where I’d land | Model 3 if you’re a 40% taxpayer | MG4 for almost everyone else |
- Renault 5 — roughly £248 to £296 a month. The retro-styled supermini that has done more than any other car to make small EVs feel desirable rather than apologetic. For a second car or a city-based driver, it is the sweet spot.
- MG4 — around £320 a month. The family hatch that quietly out-specs cars costing thousands more. It is the one I would point most people towards as the default: enough range and space to be an only-car, at a monthly cost that still feels like a trick.
- Tesla Model 3 — about £441 a month. This is the premium pick, and the one where the salary sacrifice maths flatters you most. On a personal lease the Model 3 is a serious commitment; sacrificed from gross pay by a higher-rate taxpayer, it slides into territory that feels frankly unreasonable for the car you are getting — the supercharger network, the software, the resale.
If your budget stretches to it and you are a 40% taxpayer, the Model 3 is where I would put the money. Not because it is the cheapest line on the list — it is the most expensive of the three — but because the gap between its personal-lease cost and its sacrifice cost is the widest. That gap is the saving, and on the Model 3 it is enormous.
The instinct to chase the lowest monthly figure is exactly backwards. The saving maximises on the most aspirational car you can justify running — because that is where the difference between the lease price and the sacrifice price is largest.
The minimum-wage floor that quietly disqualifies people
This is the trap I see catch real drivers, and it has nothing to do with the car. You cannot sacrifice salary below the National Living Wage. After your monthly deduction, your remaining gross pay has to stay above the legal floor — for a 37.5-hour week on the 2025/26 NLW that works out at roughly £23,795 a year. Your employer’s scheme administrator will block any arrangement that breaches it.
In practice that means the most expensive cars are off-limits to anyone on a modest salary, regardless of how good the BiK rate is. It is also why I would never advise stretching to the priciest car your scheme offers — leave headroom, because a pay structure that sits just above the floor can tip you below it if your hours or basic pay change. Salary sacrifice is a long game; do not sign up to a deal that only works while every other number stays still.
It is not just your saving — the employer wins too
Worth understanding why your employer offers this at all, because it tells you how secure the scheme is. When you sacrifice gross salary, your employer’s wage bill falls, and with it their National Insurance contributions — they save the employer’s NIC rate, 15% for 2026/27, on every pound sacrificed. That is real money back to the business, which is exactly why these schemes have spread so fast and why a well-run one is not going anywhere. If your employer does not yet offer salary sacrifice, that 15% figure is the argument to put in front of them.
April 2028 is the cliff you should be planning around
Now the catch, and it is the reason I keep saying commit in 2026. From April 2028, EVs lose their road-tax exemption and move onto a new pay-per-mile charge — Fleet Alliance estimates it at around £255 a year for a typical driver. On its own that is hardly ruinous; it is a few hundred pounds against a saving running into thousands. But it lands in the same window that the BiK rate climbs to 7% and then 9%, and together they nibble at the edge of the deal year on year.
The point is not that salary sacrifice stops being worth it in 2028 — it doesn’t. The point is that the absolute best version of this deal, the 4% year, is the one in front of you right now. A typical sacrifice term runs three or four years, so a car you take this tax year locks in today’s terms for most of its life and rides through the rate changes already priced in.
What I’d do, and the one thing that would stop me
If I were a higher-rate taxpayer with a stable salary and an employer scheme on the table, I would sign this year and I would not agonise over it — the MG4 if I wanted the sensible all-rounder, the Model 3 if I wanted the saving at its most absurd. For a basic-rate earner the case is softer but still positive; just price it as a good lease, not a windfall. The only thing that would genuinely stop me is job insecurity: a salary sacrifice car is a multi-year commitment tied to your employment, and if you leave or are made redundant mid-term, the arrangement can unwind in ways that cost you. Be honest with yourself about that before you sign — the tax maths is brilliant, but it only pays out if you are still there to collect it.
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Where to check next
Use this as the final check before paying a deposit, signing finance paperwork or relying on a headline monthly figure.
