Britannia Banner

What is Salary Sacrifice?

A salary sacrifice car scheme is a popular employee benefit that allows individuals to acquire a new vehicle through their employer by sacrificing a portion of their pre-tax salary. This arrangement enables employees to access a brand-new car at a potentially lower cost compared to traditional financing methods.

Agreement and Eligibility:

Employees interested in participating in the scheme must enter into an agreement with their employer.

Eligibility criteria may vary depending on the employer's policies, but typically, employees need to have a regular income and meet any requirements set by the salary sacrifice provider.

Vehicle Selection:

Once enrolled in the scheme, employees can choose a vehicle from a range of options offered. The selection will usually be pre-determined by your employer such as EVs only.

The selection may include various makes and models, allowing employees to find a car that suits your preferences and needs.

Salary Sacrifice Calculation:

The employee decides on the amount of their salary they are willing to sacrifice to lease the chosen vehicle.

This sacrificed amount is deducted from the employee's gross salary before income tax and National Insurance contributions are applied.

Lease Agreement:

The employer leases the selected vehicle on behalf of the employee from the leasing provider.

The lease agreement typically covers a fixed term, often ranging from 2 to 4 years, during which the employee can use the vehicle.

Benefits of the Scheme:

Tax Efficiency: By sacrificing a portion of their salary, employees reduce their taxable income, resulting in potential tax savings.

Cost Savings: Salary sacrifice car schemes often offer competitive lease rates and discounts negotiated by the employer, making them financially attractive compared to retail financing options.

Inclusive Package: The lease agreement may include various costs such as insurance, road tax, maintenance, and breakdown cover, providing employees with a hassle-free driving experience.

Payment and Administration:

The sacrificed amount is deducted from the employee's salary each pay period and used to cover the lease payments.

Employers handle the administrative aspects of the scheme, including payroll deductions, lease management, and liaising with Britannia Car Leasing.

End of Lease Options:

At the end of the lease term, employees may have the option to:

  • Return the vehicle to the leasing provider without further obligations.
  • Renew the lease agreement for a new vehicle.


Before participating in a salary sacrifice car scheme, employees should carefully assess their financial situation and consider any potential impact on their overall remuneration package.

Overall, a salary sacrifice car scheme provides employees with an attractive opportunity to drive a new vehicle while potentially enjoying tax and cost savings. By partnering with reputable leasing providers and offering competitive deals, employers can enhance their employee benefits package and improve staff satisfaction and retention.