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What is Salary Sacrifice?

Leasing an electric vehicle through salary sacrifice is becoming increasingly popular, helping drivers make the switch to electric driving more affordably. These schemes can unlock benefits such as attractive tax savings for drivers and their employers. Below, we explain how salary sacrifice works and its benefits, so businesses and drivers can make an informed decision.

Explore the benefits of salary sacrifice

The salary sacrifice scheme allows you to trade a portion of your gross pay for a non-cash work perk, like a new electric vehicle, and provides unique benefits for both employers and employees.

Employee benefits

  • There’s no upfront deposit required.
  • Payments are automatically deducted from your pre-tax salary.
  • Pre-tax deductions lower your taxable income.

Employer benefits

  • By decreasing your gross payroll total, you can reduce your National Insurance contributions.
  • You can provide a valuable workplace benefit without increasing your overall payroll budgets.
  • Offering impactful and high demand perks can help attract new talent and keep current staff happy.

How does salary sacrifice work?

First your employee will choose a salary sacrifice car to lease and terms such as annual mileage and lease length. All their payments will be made with their pre-tax salary.

By doing this, employees can reduce how much of their income is subject to tax, which provides personal savings on their income tax and National Insurance payments. This also reduces the amount of National Insurance the employer pays, creating tax savings for the business as well.

Since a salary sacrifice car is considered a benefit provided by their employer, employees must pay taxes on it. This is called ‘Benefit-in-Kind’ or BiK and is often referred to as ‘company car tax’.

The exact amount of tax you pay is a set percentage of the car’s list price plus VAT and delivery charges, or its P11D value. An electric car qualifies for a low BiK rate, which is only 4% in 2026/27.

 

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A model for every requirement

Our award-winning ID. range is built to meet a wide variety of business needs and driver preferences, meaning there’s a model that can serve your specific needs. All our ID. models are available as salary sacrifice electric cars, offering drivers attractive tax-saving opportunities regardless of which you choose. Start exploring the ID. family today.

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Important information :

  1. Please be advised we may not be able to provide valuations for vehicles which are outside certain age or mileage ranges, specialist or customised, or not registered in the UK. The actual sale price is dependent on a number of additional factors, which you can discuss further with your retailer. T&Cs will apply.
  2. Volkswagen Group United Kingdom Limited is authorised and regulated by the Financial Conduct Authority, firm reference number 464440. Volkswagen Group United Kingdom Limited is acting as a credit broker, not a lender. The only lender we will introduce you to is Volkswagen Financial Services (UK) Limited, MK14 5LR. We may introduce you to vehicle retailers, who are acting as credit brokers.

  3. ^ Prices listed are Volkswagen UK’s recommended On The Road (OTR) retail price. Actual prices are set by Volkswagen authorised retailers in their sole discretion – always obtain these prices from your chosen Volkswagen Retailer. Your contract is always with the Volkswagen Retailer. Volkswagen UK’s recommended OTR includes: delivery charge, number plates, new vehicle registration fee, the first year's Vehicle Excise Duty and VAT (calculated at 20%). Images shown may not reflect base specification and depict optional cost options.

    Every effort has been made to ensure the accuracy of the information above. Prices are taken from the Volkswagen website - this website contains a large number of products and it is always possible that, despite our best efforts, some of the products listed may be incorrectly priced. Volkswagen may change prices at any time (this includes where there are government changes in regulation and/or legislation). There may be a delay to any price displaying correctly on our materials and it is always possible that, despite our best efforts, some vehicles may be incorrectly priced. Always check prices with your local retailer.

  5. Models shown and information provided (including standard equipment) reflect the specification for the current model year, which is the product currently available for order from the factory.  While we do our best to ensure that the information provided is accurate and up to date, we make no guarantee. In particular, while every effort is made to ensure that the specifications and equipment shown are correct at the time of publication, our products are being updated regularly, including to meet new regulatory standards, and are therefore subject to change without notice (this may include changes between order and delivery). The published specification, feature, technical and other information (including fuel consumption, CO2 emissions and range) may reflect a different model year or standard to that which will be built.  Vehicles available for purchase from stock and those shown within the 'Stock Locator' tool may have a different specification, from a previous model year.  There may be a delay in updates showing on our site. - always consult your chosen retailer for details.