Salary sacrifice vs car leasing: what’s the difference and which could work for you?

If you’re looking for a new car, you’ve probably come across plenty of ways to get behind the wheel. Buying outright, PCP and personal leasing have long been familiar options, but another route’s become increasingly popular: salary sacrifice.

BVRLA data shows salary sacrifice is one of the UK’s fastest-growing  ways employees are choosing for their car, with the number of cars rising by almost 165% year-on-year.¹ Department for Transport data has also estimated that around 40% of new electric cars are now funded through salary sacrifice.²

So, why are more drivers choosing salary sacrifice – and how does it compare with personally leasing a car?

What’s a salary sacrifice car scheme?

A salary sacrifice car scheme is basically what it says on the tin. You sacrifice an amount of your monthly gross salary in exchange for a car. Because the reduction is taken before Income Tax and National Insurance (NI) are calculated, you can make savings.

You’ll pay Benefit-in-Kind (BiK) tax on the car, but this is where electric cars have become particularly attractive, as they only have a 4% BiK rate in 2026/27.³ You can learn more about how Benefit-in-Kind tax works.

With Tusker, there’s also much more wrapped into the monthly amount than just the car (which we’ll get into later on)than with a lot of personal finance options. There’s no deposit* either, and no separate direct debit to arrange.

Find out more about what’s included with a Tusker salary sacrifice car.

Why are salary sacrifice car schemes becoming so popular?

Electric cars are a big part of the story.

As of August 2026, there were more than 2.18 million fully electric cars on UK roads, with EVs accounting for 25.6% of new car registrations so far.⁴

We’ve seen that shift first-hand at Tusker. Electric cars represented just 17% of our customer car orders in 2019, rising to more than 80% so far in 2026.⁵

Salary sacrifice makes accessing a brand-new or pre-loved car more affordable.

Personal leasing vs salary sacrifice: what’s the difference?

Personal Contract Hire, usually called PCH or personal leasing, lets you drive a car for an agreed period in return for fixed monthly rentals. It can look similar to salary sacrifice at first glance because you choose a car, agree a mileage and term, and usually return the car at the end, but the key difference is how you pay and what’s included.

With a personal lease, the rental comes from your take-home pay. MoneyHelper says you’ll also typically make an upfront payment equivalent to around three to six monthly rentals⁸, whilst Aviva states insurance is rarely included with a personal lease. ⁹

So, let’s see how salary sacrifice and personal leasing differ in overall packages:

What does that mean in real life? Let’s look at the Renault 5.

A low advertised monthly rental can look appealing, but it doesn’t necessarily represent everything you’ll need to budget for.

Take the Renault 5 E-Tech electric.

At the time of writing, a personal lease for a Renault 5 E-Tech electric techno+ was advertised at £249.73 a month over 48 months and 5,000 miles per year.

However, the deal also requires an initial payment of £2,996.74, with maintenance not included. Spread that initial payment over the 48-month agreement and it’ll add another £62.43 a month when looking at the overall cost.

Then there’s insurance, servicing and other potential motoring costs to consider.

Two drivers could pay exactly the same personal lease rental but have very different overall costs because insurance is arranged separately and influenced by individual circumstances such as age, postcode and driving history.

Here’s how an illustrative newer-driver example compares with a Tusker quote for a driver looking for 5,000 miles per year and an agreement of over 48 months:

That’s an illustrative difference of around £180 a month

In this example, the personal lease works out at around £460 a month once the initial payment, illustrative insurance and servicing are taken into account.

For comparison, a higher-rate taxpayer choosing a Renault 5 E-Tech electric with a P11D value of £22,930 through Tusker could see an estimated £280 monthly effect on their take-home salary in 2026/27.

The £280 already takes into account the estimated Income Tax, National Insurance and pension contribution savings, as well as £31 a month in BiK tax.

That’s an illustrative difference of around £180 a month, before adding any potential additional maintenance or replacement tyre costs to the personal lease.

And with Tusker, comprehensive insurance, servicing and maintenance, replacement tyres, road tax, MOTs when required, RAC breakdown cover and Lifestyle Protections are already included.

It’s important to remember that this is an illustrative comparison. Personal lease deals and insurance premiums change, while your Tusker amount will depend on your salary, tax position, pension arrangements, chosen car, mileage and agreement length.

BiK rates also change each tax year, so the net amount can change during your agreement. That’s why comparing what you’ll actually spend overall, rather than the advertised monthly rental alone, gives you a much clearer picture.

Why choose Tusker for salary sacrifice?

Choosing a salary sacrifice car scheme isn’t only about the monthly amount – the service and support behind it matter too.

Tusker has been recognised across the employee benefits, leasing and sustainable transport industries, including being named Company Car Scheme of the Year at the 2025 Workplace Savings & Benefits Awards and Leasing Company of the Year (more than 20,000 cars) at both the 2025 BusinessCar Awards and GREENFLEET Awards.

We’ve also received the Environmental Impact Award at the 2025 e-Mobility Awards, while our commitment to customer service has been recognised through awards for both our teams and individual colleagues.

And in 2026, Tusker received the Service Provider Excellence Award for Reward and Benefits, with our EET Renewals team also recognised as Industry Heroes at the BVRLA Awards.

For drivers and employers, that recognition sits behind a scheme designed to make choosing, running and enjoying a car as straightforward as possible.

Salary sacrifice or personal leasing: which is best for you?

There’s no one-size-fits-all answer.

Personal leasing may suit someone who doesn’t have access to a salary sacrifice scheme through their employer and is more comfortable arranging insurance, maintenance and other running costs themselves.

Salary sacrifice, on the other hand, brings together the car, Income Tax and National insurance savings, and many of the everyday costs of running it. And with fully electric cars benefiting from a 4% BiK rate in 2026/27, EVs can be particularly attractive through salary sacrifice.

If your company doesn’t already offer a scheme, you can still recommend car benefit schemes like ours to your employer – visit our employees page to find out how.

The important thing to remember is to compare what you’re actually getting for your monthly amount, rather than the advertised rental alone.

With Tusker, you can choose from hundreds of brand-new and Pre-Loved cars, personalise your agreement, benefit from manufacturer discounts and see an estimated effect on your take-home salary before ordering.

So rather than asking “which has the lowest monthly figure?”, a better question might be:

“What am I actually getting for my monthly amount?”

For a growing number of drivers and employers, that’s where salary sacrifice starts to make a lot of sense.

Ready to find out more?

Whether you’re looking for a new car through your workplace or considering salary sacrifice as a benefit for your employees, Tusker can help.

Already have access to Tusker? Log in to explore the cars available and build your personalised quote.

Looking to offer salary sacrifice to your employees? Find out more about setting up a Tusker car benefit scheme and how it could support your people and your organisation.

Sources

1. BVRLA, Leasing Outlook, July 2026 – salary sacrifice fleet growth.
2. Written evidence submitted to the UK Parliament, citing Department for Transport data on EV salary sacrifice funding.
3. HMRC/GOV.UK, company car Benefit-in-Kind appropriate percentages, 2026/27.
4. Zapmap, using SMMT registration data, August 2026.
5. Tusker, environmental credentials – customer electric car orders.
6. Tusker EV Employer Survey 2026, as reported by Fleet World and HRD Pathfinder Club.
7. Tusker EV Employer Survey 2026, employer attraction, retention and National Insurance findings.
8. MoneyHelper, Leasing a car with Personal Contract Hire (PCH).
9. Aviva, How to insure a lease car, updated June 2026.
10. What Car?/Auto Trader personal leasing listing for Renault 5 E-Tech electric techno+, accessed September 2026.
11. MoneyHelper, guidance on ending a Personal Contract Hire agreement early.

*Scheme eligibility and terms apply. Tusker quote shown is illustrative and based on the assumptions stated. Personal lease prices and insurance costs can change and individual circumstances will affect actual costs. Benefit-in-Kind rates change by tax year.