Salary sacrifice is one of the most valuable benefits a business can offer – but it can also be one of the trickiest to communicate.
Mention tax codes, Benefit in Kind, or National Insurance contributions in a staff briefing, and you’ll often be met with glazed expressions.
The good news is that it doesn’t have to be complicated. With the right framing, you can explain salary sacrifice clearly, confidently, and in a way that gets employees genuinely excited about it.
Start With The Simple Version
Before diving into the detail, lead with the big picture.
Salary sacrifice is an agreement between an employer and an employee, where the employee gives up a portion of their gross salary – that’s their pay before tax – in exchange for a non-cash benefit. In our case, that benefit is a brand-new or used electric car.
Because the deduction comes out before income tax and National Insurance are calculated, employees end up paying less of both. The car effectively costs less than it would if they went out and leased one privately. In fact, through EZOO’s salary sacrifice scheme, employees can save up to 60% compared to a personal lease.
What’s Included?
One of the most compelling parts of salary sacrifice – and one that’s easy to overlook in a basic explanation – is just how much comes bundled into the monthly payment.
Our all-inclusive package covers insurance, servicing, maintenance, breakdown cover, and road tax. There’s no deposit to pay, no credit check, and no nasty surprises. Employees can simply hand over their old car keys and start driving electric.
This is worth emphasising to staff. When comparing the sacrifice amount to what they’d otherwise spend, it’s not just a lease cost — it’s everything wrapped into one simple figure.
Explaining Benefit in Kind
This is often where employees get confused – so it’s worth tackling head-on.
When you drive a car provided by your employer, HMRC classifies it as a benefit and applies a small tax charge called Benefit in Kind (BiK).
This is calculated by multiplying the car’s P11D value (its list price) by the BiK rate, then by the employee’s income tax rate.
For electric cars, the BiK rate is currently just 3% for the 2025/26 tax year, rising to 4% in 2026/27 and 5% in 2027/28. Compare that to petrol or diesel cars, where BiK rates can exceed 30%, and the advantage becomes very clear.
Does Salary Sacrifice Affect Anything Else?
This is one of the most common questions employees ask – and it deserves an honest answer.
Because salary sacrifice lowers your gross pay, it can affect a small number of things. Percentage-based pension contributions may reduce slightly, since they’re often calculated on the sacrificed salary rather than the original amount. Some employers address this by adjusting their contributions accordingly, so it’s worth checking your company’s policy.
Similarly, because your taxable income is lower, your take-home figure will look different on paper – which can occasionally prompt questions from mortgage lenders. In most cases, lenders will consider pre-sacrifice salary when assessing applications, especially if your employer provides the relevant documentation.
One firm rule: Salary sacrifice cannot reduce an employee’s cash pay below the National Minimum Wage. EZOO and responsible scheme providers build in safeguards to ensure this never happens.
Is A Salary Sacrifice Car A Company Car?
Technically, yes – which leads some employees to assume it comes with the same high tax charges as a traditional company car. It doesn’t.
Salary sacrifice cars are treated as company cars for BiK purposes, but because electric vehicles sit in the lowest BiK band, the tax is minimal. Our article on whether a salary-sacrifice car is a company car provides a more detailed breakdown for anyone who wants to explore this further.
Addressing Common Concerns
“What if I leave my job?” – A fair concern. Most schemes include a protected termination clause, meaning employees are not left with an unexpected bill if their circumstances change. EZOO’s scheme is set up with this protection in mind. For clarity on exactly how it works, see our guide on what happens to your salary sacrifice car if you leave.
“Will the scheme change?” – The government has confirmed EV BiK rates all the way through to 2029/30, giving employees and employers genuine certainty when planning. Electric cars remain the most tax-efficient vehicle type in any salary sacrifice scheme. You can read our latest update on whether salary sacrifice is expected to change for the current position.
“Is it worth it on a lower salary?” – Yes, in most cases. Both basic and higher-rate taxpayers benefit from salary sacrifice, though higher-rate taxpayers typically see larger savings.
Make It Personal
The most effective way to bring salary sacrifice to life for employees is to show them their actual numbers. EZOO’s employee portal does exactly this – once your company is signed up, employees can log in, browse available cars, and see a fully personalised breakdown of what they’d pay and how much they’d save, based on their specific salary and tax rate.
Abstract percentages become real figures. Real figures have a way of making decisions easy.