Salary sacrifice explained
Explore the benefits of salary sacrifice
Leasing an electric vehicle (EV) through salary sacrifice is becoming increasingly popular, helping drivers to make the switch to electric driving.
These schemes can unlock many benefits too, including attractive tax savings for drivers and their employers. Below, we explain how salary sacrifice works, helping businesses and drivers to make an informed choice.
How does salary sacrifice work?
Employees choose a vehicle to lease and the terms – including annual mileage and the length of the lease – and pay the monthly fee from their gross, or pre-tax, salary.
In doing so, employees can reduce how much of their income is subject to tax, making a personal saving on income tax and national insurance payments. This also reduces the amount of national insurance that the employer pays, creating tax savings for the business as well.
Employees have to pay taxes on some benefits their employer provides, including cars. This is called ‘Benefit-in-Kind’ (BiK), though it’s often referred to as ‘company car tax’.
How much tax you pay is set at a percentage of the car’s P11D value – that is, its list price plus VAT and any delivery fees. Cars capable of long-distance, all-electric driving – and with low tailpipe emission values – are subject to low BiK rates: just 3% in 2025/26, rising to 4% in 2026/27.
A model for every requirement
Volkswagen’s fully electric ID. models are available via salary sacrifice, offering drivers attractive tax-saving opportunities – no matter which vehicle you choose.
Built to meet a wide range of business requirements and driver preferences, explore our award-winning ID. range today.
