EV vs Pension Salary Sacrifice Calculator

Pound-for-pound of take-home given up, pension sacrifice almost always delivers more value, because it carries no Benefit-in-Kind charge and the full sacrificed amount lands in your pension. An EV lease sacrifice also saves income tax and employee NI, but the car itself is a taxable benefit: HMRC charges Benefit-in-Kind on 4% of the vehicle's P11D value at your marginal income tax rate, which claws back part of the saving. That doesn't make an EV scheme a bad idea, it's still one of the cheapest ways to run a car in the UK, but it's a lifestyle and cost-of-motoring decision, not a wealth-building one. If retirement saving is the priority and you're not already maximising pension contributions, pension sacrifice is the stronger pound-for-pound choice. If you need a car regardless, EV salary sacrifice is usually far cheaper than buying or leasing privately with taxed income.

Employer NI is 15% for the 2026/27 tax year, the rate set at the April 2025 Budget and applied above the £5,000 secondary threshold. 13.8% was the rate that applied before that Budget change and still gets quoted in older articles and some calculators that haven't been updated. This calculator uses the correct, current 15% rate throughout.

4% of the car's P11D value (the list price including delivery and any factory options) for a fully electric, zero-emission vehicle. This rate was confirmed at the November 2025 Autumn Budget as part of a scheduled step-up: 4% in 2026/27, rising to 5% in 2027/28, 7% in 2028/29, and 9% in 2029/30. It remains dramatically lower than the 17-37% BiK band that applies to petrol and diesel cars. This schedule is correct as of the November 2025 Budget and could be revised at a future fiscal event, so check gov.uk's current company car tax tables before relying on it for a multi-year lease decision.

No, legally it cannot, for pension sacrifice, an EV lease, or any other salary sacrifice scheme. HMRC treats National Minimum Wage compliance as being tested on your actual contractual cash pay after the sacrifice is applied. If a sacrifice amount would take your hourly cash pay below the National Living Wage (£12.71/hour for age 21+ from April 2026), your employer cannot legally offer you that level of sacrifice, however small the amount. If you're close to the floor, this calculator's NMW check will flag it: reduce the sacrifice amount or speak to HR about what's actually available to you.

By default, no: your employer keeps the full 15% employer NI saving on the sacrificed amount, since it's no longer paying you that slice of salary. Some employers, as a goodwill gesture, choose to pass some or all of that saving back into your pension as an extra "NI boost" contribution on top of your own sacrifice. This isn't universal, and there's no legal requirement for an employer to do it, so check your own scheme documentation. This calculator includes an optional toggle, off by default, so you can model the difference if your employer does offer a boost.

No. The pension Annual Allowance (£60,000 for 2026/27) only limits how much can go into a registered pension scheme each year without a tax charge. An EV lease sacrifice reduces your gross salary in exchange for a car benefit, not a pension contribution, so it has no bearing on your Annual Allowance at all. The two schemes only interact through your gross salary: sacrificing into both at once reduces the salary base you have left to work with, and can matter for mortgage affordability assessments, which typically use post-sacrifice salary.

It makes both routes more valuable, and pension sacrifice specifically can pull your income back below £100,000 and restore your Personal Allowance. In this band, every extra pound of income effectively costs you close to 60p in income tax before National Insurance is even added, because you're both paying higher-rate tax on the pound itself and losing another slice of your tax-free Personal Allowance at the same time. A pension sacrifice large enough to bring your adjusted net income back to £100,000 or below can restore some or all of that allowance on top of the direct tax and NI saving. Our dedicated guide to this band, linked below, covers the mechanics of the taper itself in full; use this calculator to see the exact pension vs EV numbers at your salary.