Salary sacrifice for electric & plug-in hybrid cars
Exchange part of your gross salary for a fully maintained electric or plug-in hybrid car. The lower a vehicle's Benefit-in-Kind rate, the more of the tax saving actually reaches you — which is why we keep this scheme to EVs and PHEVs only.
Salary sacrifice works by reducing your gross salary in exchange for a car, so your Income Tax and National Insurance are calculated on a smaller number before your take-home pay is worked out. In return, you pay Benefit-in-Kind tax on the car itself — and because that rate is tied directly to a vehicle's emissions and electric range, the car you choose has a big effect on how much you actually save.
That's why we only offer salary sacrifice on electric and plug-in hybrid vehicles. A fully electric car sits in the lowest Benefit-in-Kind band by a wide margin, and plug-in hybrids with a decent electric-only range aren't far behind. On a petrol or diesel car, the Benefit-in-Kind rate is high enough that salary sacrifice rarely beats a straightforward personal lease — so we've kept the scheme to vehicles where the saving is genuinely worth having.
Our salary sacrifice scheme is run in partnership with Cocoon Vehicles, who handle scheme set-up and ongoing payroll administration for employers. Below is a plain breakdown of how it compares to other ways of getting a car through work, and how much the vehicle you choose actually matters.
More detail on Cocoon Vehicles →Key Features
Payments are taken before Income Tax and National Insurance are calculated — that's where the saving comes from.
We only offer this scheme on vehicles with genuinely low Benefit-in-Kind rates, so the saving is worth having.
Servicing, maintenance and breakdown cover can be bundled in, for one predictable monthly payment.
Cocoon Vehicles supports employers through scheme set-up and ongoing payroll administration.
How salary sacrifice compares
Salary sacrifice vs. other ways to get a car through work
| Salary Sacrifice | Cash Car Allowance | Traditional Company Car | Personal Lease | |
|---|---|---|---|---|
| Paid from | Gross salary, before tax & NI | Net take-home pay | Employer-funded | Net take-home pay |
| Income Tax / NI saving | Yes | No | No | No |
| Benefit-in-Kind tax due | Yes, based on the car's BiK % | No BiK, but the allowance itself is taxed as income | Yes, based on the car's BiK % | No |
| Who arranges the car | Employer's scheme (us, via Cocoon Vehicles) | Employee, independently | Employer / fleet manager | Employee, independently |
| Servicing & maintenance | Usually bundled in | Employee arranges & pays | Usually bundled in | Employee arranges & pays separately |
| Requires employer to offer a scheme | Yes | No | Yes | No |
A general comparison to illustrate how the models differ — your employer's specific scheme rules take precedence.
Why the vehicle you pick matters: 2026/27 Benefit-in-Kind rates
| Vehicle type | 2026/27 BiK rate | Where it's heading |
|---|---|---|
| Fully electric (EV) | 4% | Rising by 1–2 percentage points a year to a 9% cap by 2029/30 |
| Plug-in hybrid (PHEV) | Roughly 6–19%, depending on electric-only range — the further it can go on battery alone, the lower the rate | Moves to a single flat rate of 18% from April 2028 |
| Petrol / diesel | 23–37%, based on CO2 emissions (plus a 4% surcharge on diesels that don't meet RDE2 standards) | Rising to a 39% cap by 2029/30 |
Rates are set by HMRC and shown as published for the 2026/27 tax year, correct as of August 2026. Exact plug-in hybrid rates depend on a specific model's certified electric-only range, and future tax-year rates can change. This is general information, not tax or financial advice — always confirm the figure for a specific vehicle and your own circumstances with HMRC or an accountant before deciding.
Is Salary Sacrifice right for you?
Employees who want an electric or plug-in hybrid car at a lower net cost than a personal lease
Employers looking to offer a benefit that costs little to nothing to run
Anyone who can charge at home or work, or has a commute suited to a plug-in hybrid's electric-only range
HR and payroll teams comparing salary sacrifice against a cash car allowance
Salary Sacrifice — Live Availability
Salary Sacrifice FAQs
Why does Drive Car Flex only offer salary sacrifice on electric and plug-in hybrid cars?+
The saving comes largely from the gap between your income tax rate and the car's Benefit-in-Kind rate. EVs and PHEVs have low enough BiK rates that the numbers work in your favour; on a petrol or diesel car the BiK rate is high enough that salary sacrifice rarely saves money over a personal lease, so we've kept the scheme focused on vehicles where it genuinely pays off.
How much Benefit-in-Kind tax will I pay?+
It depends on the car's list price and its BiK percentage, which HMRC sets based on emissions and, for plug-in hybrids, electric-only range. See the rate comparison above for the 2026/27 tax year, or ask our team for a figure specific to the car you're considering.
Does salary sacrifice affect my pension or other salary-linked benefits?+
It can — reducing your gross salary may affect pension contributions, mortgage affordability assessments, and other benefits calculated from your salary. We'd always recommend independent financial advice before joining a scheme.
Who sets up and administers the scheme?+
Our salary sacrifice scheme is run in partnership with Cocoon Vehicles, who support employers through scheme set-up and ongoing payroll administration.
What's included in the monthly payment?+
Typically the vehicle, servicing, maintenance and breakdown cover, bundled into one payment taken from gross salary. Whether insurance is included depends on how your employer's scheme is structured — our team can confirm.
Where can I find out more?+
Get in touch and our team will talk you through whether salary sacrifice makes sense for your circumstances, or point you to our partner Cocoon Vehicles for full scheme details.
Ready to talk Salary Sacrifice?
Our team will talk you through the realistic options for your situation — no pressure, no jargon.