What Is Salary Sacrifice?
Salary sacrifice is a way of giving up part of your gross salary in exchange for a benefit — such as a company car.
Because the salary reduction happens before tax, you can reduce your Income Tax and National Insurance.
This is why salary sacrifice is commonly used for cars, especially electric vehicles.
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Why Electric Cars Work Best
Electric cars are particularly tax-efficient because they have very low Benefit-in-Kind (BIK) tax rates.
This means the tax you pay on the car is usually much lower than the tax you save on your salary.
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How Salary Sacrifice Works
A typical scheme works like this:
- You choose a car through your employer
- Your gross salary is reduced
- You save Income Tax and National Insurance
- You pay BIK tax on the car
- The result is often a lower net cost
👉 Read the full explanation in our
salary sacrifice guide.
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Understanding the Tax
The tax position is key to understanding whether salary sacrifice is right for you.
👉 Learn more about tax in our
salary sacrifice tax guide.
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Try the Salary Sacrifice Calculator
Use our free calculator to estimate your net pay and savings.
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