Salary Sacrifice Car Leasing Explained (2025 Edition)

Updated October 2025 | Reading time: 7 minutes

Salary sacrifice car leasing is one of the fastest-growing employee benefits in the UK. It allows you to pay for a brand-new lease car directly from your gross salary — before tax — resulting in huge savings, particularly on electric vehicles. This guide from Silverstone Leasing breaks down exactly how it works, who qualifies, and how much you could save.

What Is Salary Sacrifice Car Leasing?

Salary sacrifice car leasing is a scheme where an employee gives up part of their gross salary in exchange for a fully maintained lease car. Because the deduction happens before income tax and National Insurance, employees can save hundreds of pounds per month — especially when choosing an EV with low Benefit-in-Kind (BIK) tax.

Learn more at our dedicated scheme page: Salary Sacrifice Car Scheme for Businesses.

How Does Salary Sacrifice Work?

1. Employer partners with Silverstone Leasing to launch a scheme.
2. Employee chooses an electric car and mileage/contract terms.
3. Monthly rental is taken from gross pay (pre-tax).
4. Employee pays low BIK tax on the car — just 2% in 2025 for fully electric vehicles.
5. At end of contract: return, extend or renew into a brand-new model.

Everything is included in one fixed monthly deduction:

• Vehicle lease
• Servicing and maintenance
• Breakdown cover
• Road tax
• Tyres

Who Is Eligible?

Eligibility may vary slightly by employer and funder, but generally:

✅ Salary Sacrifice Eligibility Checklist

• ✔ You are a PAYE employee
• ✔ Your employer has approved or offers the scheme
• ✔ You pass a standard credit/affordability check
• ✔ Your salary remains above National Living Wage after sacrifice
• ✔ You are on a permanent or fixed long-term contract
• ✔ You are based in the UK

Not usually eligible: agency workers, zero-hour contractors, and self-employed individuals — but business leasing may be suitable instead: Guide to Business Car Leasing

Benefits for Employees

• ✅ Massive tax and NI savings on EVs
• ✅ Brand-new cars every 2–4 years
• ✅ Maintenance, breakdown & tyres included
• ✅ No deposit required
• ✅ Cleaner, greener driving

Benefits for Employers

• ✅ Zero-cost employee benefit
• ✅ Helps attract & retain top talent
• ✅ Supports ESG & sustainability goals
• ✅ Can reduce NI contributions
• ✅ Perfect for EV company fleet strategy

Launch a scheme easily with our support: Enable Salary Sacrifice for Your Business

Why EVs Are the Smart Choice in 2025

Electric vehicles remain the biggest winners thanks to the 2% BIK rate capped until 2028. That makes salary sacrifice the most affordable way to drive electric.

Explore electric options: Electric Cars Explained

Frequently Asked Questions

How much can I save?

It depends on salary and vehicle choice — but EV drivers often save £200–£500+ per month compared to personal leasing.

What happens if I leave my job?

Your employer will have early termination protection options — these will be explained before you commit.

Can I include insurance?

Yes — schemes can include optional insurance depending on employer preference.

Are hybrids eligible?

Yes — though tax savings are better with full electric models.

Why Choose Silverstone Leasing?

Silverstone Leasing is a family-run FCA-authorised broker and proud BVRLA member, working directly with the UK’s leading funders to deliver competitive pricing and outstanding support to businesses nationwide.

Speak to our Salary Sacrifice Specialists

Conclusion

Salary sacrifice offers one of the most cost-effective routes into electric driving — helping employees save money while helping employers boost sustainability and employee satisfaction.

Ready to discover your savings? Explore our electric car leasing options today: Electric Cars Explained