Thinking about switching to an electric vehicle through a salary sacrifice scheme? It’s one of the most tax-efficient and affordable ways to drive electric, however it’s essential to make sure your take-home pay doesn’t drop below the UK’s National Living Wage.
How Salary Sacrifice Works
Lease Electric's salary sacrifice scheme lets you exchange part of your gross salary for a brand-new fully electric car.
Instead of paying for the car, insurance and maintenance out of your post-tax income, these costs are bundled into a single monthly deduction taken before tax and National Insurance.
By opting for salary sacrifice, you can reduce your tax and National Insurance contributions. However, there is a leagl catch,you can’t sacrifice so much of your salary that your remaining pay falls below the National Minimum Wage.
The National Minimum Wage in 2025
From April 2025, the National Minimum Wage for anyone aged 21 and over is £12.21 per hour.
For a full-time employee working 40 hours a week, that works out at roughly:
£12.21 × 40 hours × 52 weeks = £25,396 per year
This is the legal minimum you must take home before tax so any salary sacrifice agreement must not reduce your gross pay below this figure.
How to work out the Minimum Salary You need
Say your annual salary is S, and your annual car deduction is D, after sacrifice, your salary becomes S – D, and this figure must not fall below mimum-wage.
To comply with minimum-wage laws, if you are ages 21 or above, and work a 40 hour week, your salary must not fall below £25,396 per annum in 2025/26.
For example, if your annual Salary (S) = £30,000 and your Monthly Deduction (D) = £335 x 12 (Yearly Deduction) = £4020, your annual salary becomes (S-D) = £25,980. As this figure is above the annual minimum wage for 2025/26 - you remain compliant.
However, if if your annual Salary (S) = £30,000 and your Monthly Deduction (D) = £550 x 12 (Yearly Deduction) = £6600 your annual salary becomes (S-D) = £23,400. As this figure is below the annual minimum wage for 2025/26 - you are not compliant, and therefore can not proceed.
National Minimum Wage in 2026/27
It is important to remeber, that this rule is in place through out the duration of your contract, and therefore should National Minimum Wage increase, exisitng salary sacrifice agreements must not reduce your gross pay below the increased Minimum Wage required.
From April 2026, the National Minimum Wage for anyone aged 21 and over is £12.71 per hour.
For a full-time employee working 40 hours a week, that works out at roughly:
£12.71 × 40 hours × 52 weeks = £26,436.80 per year
This is the legal minimum you must take home before tax so any salary sacrifice agreement must not reduce your gross pay below this figure.
| Annual Gross Salary Sacrifice | Minimum Salary Required 25/26 | Minimum Salary Required 26/27 |
|---|---|---|
| £5,000 | £30,396 per year | £31,436.80 |
| £8,000 | £33,396 per year | £34,436.80 |
| £10,000 | £35,396 per year | £36,436.80 |
Salary Sacrifice Examples
Each of the examples below features popular EVs chosen by our existing Salary Sacrifice customers. We have based the quotations on 10,000 miles per year, a 48-month term, and insurance for a 40-year-old driver with a GL2 postcode.
The Gross figure quoted includes the vehicle, insurance (with no additional drivers), maintenance, tyres, and a Solo 3s home charger with standard installation.
The Gross salary sacrifice represents the total cost of the agreement before any savings are applied.
BYD Dolphin Surf
65kW Active 30kWh 5dr Auto
| Monthly Gross Salary Sacrifice | Annual Gross Salary Sacrifice | Minimum Salary Required 25/26 | Minimum Salary Required 26/27 |
|---|---|---|---|
| £470.22 | £5,642.64 | £31,039.44 | £32,079.44 |
Jaecoo 5
155kW Luxury 61kWh 5dr Auto
| Monthly Gross Salary Sacrifice | Annual Gross Salary Sacrifice | Minimum Salary Required 25/26 | Minimum Salary Required 26/27 |
|---|---|---|---|
| £580.50 | £6,966 | £32,362 | £33,402 |
Volkswagen ID.5
210kW Match Pro 77kWh 5dr Auto
| Monthly Gross Salary Sacrifice | Annual Gross Salary Sacrifice | Minimum Salary Required 25/26 | Minimum Salary Required 26/27 |
|---|---|---|---|
| £753.14 | £9037.68 | £34,434.48 | £35,474.48 |
Polestar 4
200kW 100kWh Long Range Single Motor Prime 5dr Auto
Lease Electric's most popular Salary Sacrifice car of 2025.
| Monthly Gross Salary Sacrifice | Annual Gross Salary Sacrifice | Minimum Salary Required 25/26 | Minimum Salary Required 26/27 |
|---|---|---|---|
| £760.81 | £9,129.72 | £34,526.52 | £35,566.52 |
BMW iX3
345kW xDrive50 M Sport Pro 113kWh 5dr Auto [Tech]
| Monthly Gross Salary Sacrifice | Annual Gross Salary Sacrifice | Minimum Salary Required 25/26 | Minimum Salary Required 26/27 |
|---|---|---|---|
| £1,128.25 | £13,539 | £38,935.80 | £29,975.80 |
Porsche Taycan Saloon
716kW Turbo GT 105kWh 4dr Auto
| Monthly Gross Salary Sacrifice | Annual Gross Salary Sacrifice | Minimum Salary Required 25/26 | Minimum Salary Required 26/27 |
|---|---|---|---|
| £2,953.60 | £35,443.20 | £60,8040 | £61,880 |
These calculations are provided as guidance only. We recommend that you speak with your HR or Payroll team to confirm the amount you are able to sacrifice. Salary Sacrifice arrangements must not reduce your income below the National Minimum Wage, and your employer must also ensure that the reductions are affordable.
At Lease Electric, we recommend that employers offer this scheme only to employees earning £35,000 or above (2025/26) with an increase budgeted for 2026/27, to help avoid disappointment.
The Lease Electric Salary Sacrifice Portal will automatically notify users if a quoted amount makes a vehicle unavailable due to National Minimum Wage requirements, our team will check this and notify the employee and the scheme adminstrator should salary sacrifice be unobtainable.