Are salary sacrifice car schemes worth it in 2023?

Are salary sacrifice car schemes worth it? 

1 in 4 doesn’t think the idea of salary sacrifice is a positive one. Are they right to think so? Or does the term ‘sacrifice’ raise brows for no good reason?  

Let’s investigate and answer the question: are salary sacrifice car schemes worth it?  

Is EV salary sacrifice worth it? 

Rows of white cars and one green electric car

Is electric vehicle salary sacrifice worth it? Getting an electric car through a salary sacrifice scheme is the best way to take advantage of money savings and value.  

Not only are you promised low running and maintenance costs, but the Benefit-In-Kind (BIK) rate, which is the tax you pay for a company car, is outrageously low for electric cars.  

Because EVs emit so little CO² drivers pay a lovely 2% BIK. For a base Tesla Model Y in the tax year 2023/2024, drivers pay just £1,099 a year.  

Compared to a whopping 37% BIK rate for diesel models, which can go up to many thousands, paying just a 2% BIK rate is just one of many reasons people are choosing to switch to electric. 

On top of this, you are helping to reduce your personal carbon footprint on the roads whilst cruising through cities without facing any congestion charges. Woo-hoo! 

When are salary sacrifice car schemes worth it? 

Now you know why electric cars are the best vehicles to go for if you want to take full advantage of the salary sacrifice scheme’s benefits. What about the general benefits? When are salary sacrifice car schemes worth it? 

New car for less 

If you are looking to get a new car, especially if it’s electric, then there are a million reasons why salary sacrifice car schemes are worth it. You get a brand-new electric vehicle for less than if you were to get it outside the scheme. 

Tax & National Insurance 

Whilst also getting a brand-new car, you get to enjoy paying less tax and national insurance (NI) contributions. Employers pay fewer employee NI contributions too! 

Are salary sacrifice car schemes worth it for employee appreciation & loyalty? 

If you’re looking to retain existing employees and want them to feel appreciated, a salary sacrifice car scheme is a fantastic opportunity to do this. Not only will they feel seen and heard, but they are likely to stay loyal if their needs are being met. 

Cheaper company car tax  

As mentioned previously, electric cars are well worth it over ICE cars. Not only because of the low maintenance and running costs but because you pay much less BIK rates than diesel and petrol cars. 

Easy payments 

If you’re thinking “is a salary sacrifice car lease worth it”, and you are someone who needs easy monthly payments without a credit check – then it’s really a no-brainer. 

In this car scheme, monthly payments are fixed. That means stable payments and easy budgeting. 

The scheme also includes servicing, maintenance and road tax. What a win-win-win!  

Corporate discounts 

In car schemes for salary sacrifice, the cars leased are on corporate discounts. Which means vehicles are available at a reduced cost. 

This is beneficial for both the employee and employer.  

When are salary sacrifice car schemes not worth it? 

in red salary sacrifice on white paper surrounded by coins glasses a calculator and jar - are salary sacrifice car schemes worth it

Now we’ve gone over when are salary sacrifice car schemes worth it, what about when salary sacrifice schemes are not worth doing?  

Employee leaves 

If an employee leaves during the contract, the payments of the company car will be left to the employer to pay. This includes any remaining costs of the car. 

OSV offers a solution to this through Early Termination Insurance, which covers all unexpected surprises and costs. For more information get in touch with us today

This goes both ways. If you are an employee with a company car, if you leave your job you have to hand back the car to the company. So, this is worth keeping in mind. 

Pension contributions 

Although you do benefit from paying less tax, you could also be paying less into your pension contributions when taking part in a car scheme.  

ICE car 

If you are really against electric cars and are looking to get a traditional internal combustion engine vehicle, such as a petrol or diesel car, then a salary sacrifice car scheme won’t be the best solution for you. There are much better alternatives for diesel and petrolheads, such as leasing or financing.  

You want to own the car 

In salary sacrifice car schemes, the company car is financed on a lease agreement so the vehicle is the property of the lease company which has an agreement with your employer.  

At the end of the agreed contract on the vehicle, you will hand this back and have the opportunity to choose a new vehicle via the salary sacrifice scheme again. 


If you are on a lower income close to the national minimum wage, taking part in the scheme could be less beneficial for you financially, as it could take you below the national minimum wage threshold.  

Whether or not you are okay with this, an employer cannot allow employees who risk going below the threshold to take part in a salary sacrifice car scheme. 

Restricted mileage 

If your commute often varies, and you don’t have a set average number of miles you drive per year, it’s likely this scheme won’t be suited for you. As you must stick to a set number of miles per year, usually from 5,000 to 10,000 miles. 

This isn’t set in stone, as you can pay more monthly if you go over the pre-agreed annual mileage. However, if your life is unpredictable and you aren’t sure how much driving you will be doing, it is likely getting a car through this scheme will not be ideal for you.  

Are salary sacrifice car schemes worth it? 

So, now that we’ve explored the question – Are salary sacrifice schemes worth it? – and gone over when you should and shouldn’t take part in the scheme, let’s reflect on what we’ve covered so you have a final answer. 

If you are an employee looking to go electric, enjoy financial benefits including paying less tax, BIK rates, and NI contributions, and wouldn’t mind sacrificing a portion of your salary to get a brand-new EV for less – then a salary sacrifice car scheme will be well worth it. 

If you are an employer looking to increase employee retention, engagement and loyalty, looking to recruit new talent, and building your company’s green credentials – would salary sacrifice car schemes be worth looking into? Definitely.  

If, however, you are someone who wants to own a car at the end of the agreement – whether that be petrol or diesel, and are on a lower income, or are looking to apply for a mortgage – it may be that a salary sacrifice car scheme is just not worth it – yet.  

Green background with white text that reads Is a salary sacrifice car scheme worth it for you? Book your salary sacrifice consultation - are salary sacrifice car schemes worth it

Fed up with looking for your next vehicle?

Need advice from an experienced Vehicle Specialist on what vehicle is right for you?

Book your FREE consultation now