Salary Sacrifice vs Personal Leasing — Which Is Cheaper?

Updated October 2025 | Reading time: 8 minutes

Trying to decide between a salary sacrifice car through your employer and a personal lease you pay from net income? This UK guide explains how each works, why electric vehicles often win via salary sacrifice, and when a personal lease can still be the better choice.

New to each option? Start with: Salary Sacrifice Car Leasing Explained and Personal Car Leasing Explained.

Quick Definitions

• Salary Sacrifice: You give up part of your gross pay in exchange for a car. You pay Benefit-in-Kind (BIK) tax on the car, not income tax/NI on the salary you sacrificed. Typically includes maintenance, breakdown and road tax in a single deduction. Employer must offer/approve the scheme.
• Personal Leasing (PCH): A private lease you pay from net pay (after tax/NI). Maintenance is optional. No BIK or employer involvement.

Why Salary Sacrifice Often Beats Personal Leasing (for EVs)

• Tax advantage: The deduction is from gross salary, reducing income tax and NI. In return, you pay relatively low BIK on EVs.
• Bundled costs: Most schemes include maintenance, tyres, breakdown and road tax — simplifying your monthly budget.
• Employer support: Easy payroll deductions and access to corporate-rate funders.

Employers can set up a scheme here: Salary Sacrifice for Businesses.

When a Personal Lease Can Be Better

• Your employer doesn’t offer salary sacrifice (or you’re self-employed without PAYE).
• You prefer complete independence from workplace policies.
• You’re choosing a non-EV where BIK isn’t as favourable.

Explore live pricing here: Car Leasing Special Offers or In-Stock Deals.

At-a-Glance Comparison

New to EVs? Read our primer: Electric Cars Explained

Which One Is Cheaper for You?

For many PAYE employees choosing an EV, salary sacrifice tends to be cheaper overall than a like-for-like personal lease because the tax/NI savings outweigh the BIK. For petrol/diesel, the gap narrows — a personal lease may sometimes be similar or cheaper.

Tip: Your tax band, P11D value, and official BIK % are the key drivers. We’ll run a personalised calculation for your exact car and salary.

Request a Personalised Cost Comparison

Eligibility & Practicalities

• Salary sacrifice: Typically PAYE employees; your pay must remain above National Living Wage after sacrifice; standard credit/affordability checks apply. See Salary Sacrifice Explained.
• Personal lease: Open to most private individuals subject to credit/affordability checks. See Personal Car Leasing Guide.

Next Steps

• Employers: Launch a Salary Sacrifice Scheme
• Employees: Learn How Salary Sacrifice Works
• Everyone: View Special Offers · Browse by Manufacturer
• Applications: Apply (Personal) · Apply (Business)

Frequently Asked Questions

Do I need my employer’s permission for salary sacrifice?

Yes. Your employer must offer and approve the scheme. If they don’t, a personal lease is your route.

Is salary sacrifice only for electric cars?

No, but it’s most tax-efficient with EVs because of lower BIK.

What happens if I leave my job?

Your employer’s scheme will set out early termination protections/costs. We’ll explain these before you commit.

Can personal leases include maintenance?

Yes — you can add service, maintenance and tyres for fixed-cost motoring (similar to salary sacrifice bundles).

Which is cheaper overall?

For many employees choosing an EV, salary sacrifice often wins. For ICE or when no scheme is available, personal leasing can be comparable or cheaper.

Conclusion

If you’re a PAYE employee with access to a scheme and you want an EV, salary sacrifice is often the lowest-cost route thanks to gross-pay deductions and low BIK. If you don’t have access, prefer independence, or you’re set on a non-EV, a personal lease is a great alternative with sharp pricing and simple setup.

Ask Us Which Option Saves You More