How to save money on a new car with Salary Sacrifice

Let’s say you earn £40,000 per year, meaning you pay tax at a rate of 20%. You want to lease a brand new MINI Electric. This costs a total of £366 per month including a service and maintenance package, early termination protection and fully comprehensive insurance. However, in this electric car salary sacrifice example, the lease only costs you £255 a month. That’s a saving of more than 30%.

Looking at your monthly payslips before and after the salary sacrifice demonstrates why.

As you can see, your new net pay is £2,317. Despite the car lease costing a total of £366, this is only £255 less than your original net pay of £2,572. That £111 monthly saving translates to a benefit of £1,332 over the course of a year.

In our second example, we’ll imagine your salary is £100,000. This means you’re in the higher tax bracket of 40%. You want to take out the same lease on a new MINI Electric, costing £366 per month. Due to the bigger savings on tax, this car salary sacrifice example sees you paying only £217 a month. Here’s why.

The difference between your net pay in this example before and after the salary sacrifice is £217. Because you save more on tax, it means you pay 40% less for your new car lease. Saving £149 each month, your annual benefit is worth £1,788.

Another great salary sacrifice car example is if you’re only just in the 40% tax bracket. If your salary is £55,000 and you lease a MINI Electric for £366 a month through a salary sacrifice scheme, that almost completely wipes out the chunk of your pay that’s subject to the higher rate of tax. As you can see below, your car only ends up costing you £218 per month.

With this salary sacrifice electric car example, you’ll make a monthly saving of £148 per month on your new MINI. Equivalent to around 40%, that’s a benefit of £1,776 over the course of a year.

Whether you’re an employee wanting to sign up to a scheme or an employer looking to ramp up the benefits you offer, you’ll want a car salary sacrifice scheme that’s easy, flexible and affordable. At DriveElectric, we offer all of these things. We can help businesses increase employee satisfaction levels, while becoming more attractive to new talent and making significant cost and carbon savings.

There are many benefits to joining our EV salary sacrifice scheme – give us a call today and one of our advisors will happily talk you through it.