Salary Sacrifice vs Personal Lease

Which Option Saves You More Money?

The Cost-Saving Crossroads for UK Drivers

Imagine this: You’re eyeing a new electric car, but the £500/month personal lease quote feels steep. What if you could drive the exact vehicle for £340/month while slashing your tax bill?

This isn’t a loophole - it’s the power of salary sacrifice car schemes.

Why This Matters in 2025:

EV Boom: 1 in 4 new UK cars is electric, but most drivers overpay via personal leases.
Tax Tensions: Higher-rate taxpayers lose £12,570+ annually to Income Tax and NI.
TCH Salsa’s Edge: Unlike generic providers, we specialise in HMRC-compliant schemes with exclusive EV discounts and zero exit fees, saving employees £2,000-£5,000/year compared to personal leases.

What is a Salary Sacrifice Car Scheme? (And Why TCH Salsa Does It Better)

Plain-English Definition:

A salary sacrifice scheme lets you lease a car through your employer by reducing your pre-tax salary, lowering your Income Tax (20-45%) and National Insurance (12-2%).

TCH Salsa’s Expertise:

10+ Years of HMRC Compliance: Our legal team updates schemes biannually.
All-Inclusive Packages: Insurance, servicing, and breakdown cover are included.
EV Focus: Partnered with Tesla, Nissan, and BMW for 15% below market rates.

Real-World Savings:

James, a 40% taxpayer in Leeds, leases a £45k BMW i4:

Salary Sacrifice: £490/month (pre-tax) → £294 net cost.
Personal Lease: £590/month (post-tax) → £590 net cost.
Annual Savings: £3,552 with TCH Salsa.

Personal Leasing: The Hidden Costs Most Providers Won’t Mention

How It Works:

Using post-tax income without employer involvement, you lease a car directly from a dealer.

The Fine Print:

Admin Fees: £150-£300 setup costs (waived by TCH Salsa).
Excess Mileage: Up to 15p/mile for overages.
Insurance Gaps: Most exclude comprehensive coverage.

Case Study:

Sarah, a freelance designer, leased a Kia Niro EV:

Personal Lease Cost: £420/month + £1,200/year insurance.
Equivalent TCH Salsa Scheme: £360/month (all-inclusive).
Missed Savings: £1,440/year.

Head-to-Head Comparison: Salary Sacrifice vs Personal Lease

Factor	Salary Sacrifice (TCH Salsa)	Personal Lease (Market Average)
Monthly Cost	£250-£600 (pre-tax)	£300-£700 (post-tax)
Tax Savings	Up to 42% (Income Tax + NI)	None
EV BiK Tax Rate	2% (2024)	35% (petrol/diesel)
Employer NIC Savings	13.8% per employee	N/A
Flexibility	Free early exit if employment ends	£500-£1k termination fee

Key Insight:

"For a £50k earner, salary sacrifice saves £2,940/year vs personal leasing. Even basic-rate taxpayers save £720/year."

Tax Savings Demystified: How TCH Salsa Maximises Your Money

The Math Behind the Savings:

Pre-Tax Deductions: Reduce taxable income → Lower income Tax and NI.
EV Incentives: 2% BiK tax vs 35% for petrol cars.

Scenario Breakdown:

Salary	Car Cost	Tax Rate	Salary Sacrifice (Net)	Personal Lease (Net)	Annual Savings
£30k	£300/month	20%	£240	£300	£720
£60k	£500/month	40%	£300	£500	£2,400

Expert Tip:

"TCH Salsa’s NIC optimisations save employers £620/year per employee."

When Personal Leasing Might Make Sense (And When It Doesn’t)

Consider Personal Leasing If:

You’re self-employed or a contractor.
Your employer refuses to set up a scheme.
You need a non-EV car for under 12 months.

But Beware:

No Tax Breaks: You’re spending post-tax income.
Long-Term Costs: A 3-year personal lease on a £40k EV costs £21,600 vs £12,960 via salary sacrifice.

Why EVs Dominate Salary Sacrifice Schemes

TCH Salsa’s EV Advantages:

Exclusive Discounts: Tesla Model 3 from £349/month (vs £429 personal lease).
Free Charger Installation: Partnered with Pod Point (£1,000 value).
Future-Proofing: Schemes aligned with the UK’s 2035 petrol/diesel ban.

Employer Benefits: How TCH Salsa Outperforms Competitors

For HR Teams:

NIC Savings: £620/year per employee.
Zero Setup Fees: Unlike Octopus EV (£499 onboarding).
Sustainability Reporting: Track CO2 reductions for ESG goals.

For Fleet Managers:

24/7 Driver Support: Includes breakdown cover (vs extra £15/month with rivals).
Real-Time Telematics: Monitor mileage, charging, and maintenance.

Hidden Risks in Salary Sacrifice & Personal Leases

Risk	TCH Salsa’s Solution	Competitor Reality
Early Termination	£0 fees if employment ends	£500-£1k penalties
Pension Impact	Adjusted salary calculations	Reduced pension contributions
Mileage Overages	Customisable 10k-20k limits	15p/mile charges

Make the Tax-Smart Choice

Choose Salary Sacrifice If:

You’re a 20-45% taxpayer.
Your employer offers (or will adopt) a scheme.
You want an EV with maximum savings.

Choose Personal Leasing If:

You’re self-employed.
You need a short-term, non-EV vehicle.

🔌 Ready to find out more?

Explore how TCH Salsa can transform your benefits strategy today…

Visit TCH Salsa or contact our SALSAC specialists at 0333 0146059.

FAQs

Is salary sacrifice cheaper than personal leasing?

Yes - saves 20-42% via pre-tax deductions. TCH Salsa’s schemes are 15% cheaper than market averages.

Can I lease a petrol car via salary sacrifice?

Does salary sacrifice affect mortgage applications?

What if my employer doesn’t offer a scheme?

Are personal leases more flexible?

Do I own the car with salary sacrifice?

Can I negotiate personal lease terms?

Is insurance included?

Are there mileage limits?

How do I start a salary sacrifice scheme?

What’s the minimum salary for salary sacrifice?

Can self-employed workers use salary sacrifice?

Are maintenance costs included?

What happens if I get a pay raise?

Do I need a credit check?

Are there CO2 limits?

Why choose TCH over competitors?

Can I switch cars mid-lease?