This guide provides detailed examples of how a salary sacrifice scheme might work on four of Tesla’s popular models: the Model 3, Model Y, Model S, and Model X.
The figures used in these examples are approximate guides to give an understanding of how such a scheme works. They are based on the models’ P11D list prices and their typical monthly lease costs.
We’ve looked at three income tax bands – 20%, 40%, and 45% – to provide a broad overview that covers a range of salary bands.
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How we calculated our Tesla salary sacrifice examples
Each example breaks down the potential savings and costs involved in a salary sacrifice scheme, which includes:
- The amount of income tax saved
This is calculated as a percentage of the monthly lease cost and depends on your income tax band. - National Insurance (NI) savings
For these examples, an employee’s NI rate of 2% was applied to the monthly lease cost. - The Benefit In Kind (BIK) that would be paid
BIK is a tax applied to employees who receive benefits or perks on top of their salary. The current rate of 2% of the P11D price (divided by 12 for a monthly figure) was used. - The employer’s NI contribution on the BIK value
This is calculated at a rate of 13.8% on the BIK value. - The net cost
This represents the overall monthly cost to the employee after all deductions and additions.
These calculations provide a starting point for understanding how an EV salary sacrifice scheme could impact your monthly outgoings if you were to lease or subscribe to a Tesla. They should be used as a guide rather than definitive advice, and it is always recommended to consult with an accountant for personalised advice.
Tesla Salary Sacrifice Examples at a 20% tax rate
| Tesla Model | P11D Price | Monthly Lease Cost | Income Tax Saved (20% band) | NI Saved (12%) | BIK Paid @ 2% | Employer's NI on BiK (13.8%) | Net Cost (20% band) |
|---|---|---|---|---|---|---|---|
| Model 3 | £42,000 | £381 | £76.20 | £45.72 | £70 | £9.66 | £338.74 |
| Model Y | £44,990 | £403 | £80.60 | £48.36 | £75 | £10.35 | £359.39 |
| Model S | £55,935 | £898 | £179.60 | £107.76 | £93.23 | £12.86 | £716.73 |
| Model X | £73,135 | £973 | £194.60 | £116.76 | £121.89 | £16.82 | £800.35 |
Tesla Model 3 Salary Sacrifice Example @ 20% tax rate
- P11D list price £42,000
- Monthly lease cost: £381
- Income tax rate: 20%
- Income Tax Saved (20% of £381): £76.20
- National Insurance (NI) Saved (12% of £381): £45.72
- Benefit In Kind (BIK) Paid @ 2% (2% of £42,000/12): £70
- Employer’s National Insurance (NI) on BiK (13.8% of £70): £9.66
Net Cost: £381 – £76.20 – £45.72 + £70 + £9.66 = £338.74
Tesla Model Y Salary Sacrifice Example @ 20% tax rate
- P11D list price £44,990
- Monthly lease cost: £403
- Income tax rate: 20%
- Income Tax Saved (20% of £403): £80.60
- National Insurance (NI) Saved (12% of £403): £48.36
- Benefit In Kind (BIK) Paid @ 2% (2% of £44,990/12): £75
- Employer’s National Insurance (NI) on BiK (13.8% of £75): £10.35
Net Cost: £403 – £80.60 – £48.36 + £75 + £10.35 = £359.39
Tesla Model S Salary Sacrifice Example @ 20% tax rate
- P11D list price £55,935
- Monthly lease cost: £898
- Income tax rate: 20%
- Income Tax Saved (20% of £898): £179.60
- National Insurance (NI) Saved (12% of £898): £107.76
- Benefit In Kind (BIK) Paid @ 2% (2% of £55,935/12): £93.23
- Employer’s National Insurance (NI) on BiK (13.8% of £93.23): £12.86
Net Cost: £898 – £179.60 – £107.76 + £93.23 + £12.86 = £716.73
Tesla Model X Salary Sacrifice Example @ 20% tax rate
- P11D list price £73,135
- Monthly lease cost: £973
- Income tax rate: 20%
- Income Tax Saved (20% of £973): £194.60
- National Insurance (NI) Saved (12% of £973): £116.76
- Benefit In Kind (BIK) Paid @ 2% (2% of £73,135/12): £121.89
- Employer’s National Insurance (NI) on BiK (13.8% of £121.89): £16.82
Net Cost: £973 – £194.60 – £116.76 + £121.89 + £16.82 = £800.35
Tesla Salary Sacrifice Examples at a 40% tax rate
| Tesla Model | P11D Price | Monthly Lease Cost | Income Tax Saved (40% band) | NI Saved (12%) | BIK Paid @ 2% | Employer's NI on BiK (13.8%) | Net Cost (40% band) |
|---|---|---|---|---|---|---|---|
| Model 3 | £42,000 | £381 | £152.40 | £45.72 | £70 | £9.66 | £262.54 |
| Model Y | £44,990 | £403 | £161.20 | £48.36 | £75 | £10.35 | £278.79 |
| Model S | £55,935 | £898 | £359.20 | £107.76 | £93.23 | £12.86 | £537.03 |
| Model X | £73,135 | £973 | £389.20 | £116.76 | £121.89 | £16.82 | £605.75 |
Tesla Model 3 Salary Sacrifice Example @ 40% tax rate
- P11D list price £42,000
- Monthly lease cost: £381
- Income tax rate: 40%
- Income Tax Saved (40% of £381): £152.40
- National Insurance (NI) Saved (12% of £381): £45.72
- Benefit In Kind (BIK) Paid @ 2% (2% of £42,000/12): £70
- Employer’s National Insurance (NI) on BiK (13.8% of £70): £9.66
Net Cost: £381 – £152.40 – £45.72 + £70 + £9.66 = £262.54
Tesla Model Y Salary Sacrifice Example @ 40% tax rate
- P11D list price £44,990
- Monthly lease cost: £403
- Income tax rate: 40%
- Income Tax Saved (40% of £403): £161.20
- National Insurance (NI) Saved (12% of £403): £48.36
- Benefit In Kind (BIK) Paid @ 2% (2% of £44,990/12): £75
- Employer’s National Insurance (NI) on BiK (13.8% of £75): £10.35
Net Cost: £403 – £161.20 – £48.36 + £75 + £10.35 = £278.79
Tesla Model S Salary Sacrifice Example @ 40% tax rate
- P11D list price £55,935
- Monthly lease cost: £898
- Income tax rate: 40%
- Income Tax Saved (40% of £898): £359.20
- National Insurance (NI) Saved (12% of £898): £107.76
- Benefit In Kind (BIK) Paid @ 2% (2% of £55,935/12): £93.23
- Employer’s National Insurance (NI) on BiK (13.8% of £93.23): £12.86
Net Cost: £898 – £359.20 – £107.76 + £93.23 + £12.86 = £537.03
Tesla Model X Salary Sacrifice Example @ 40% tax rate
- P11D list price £73,135
- Monthly lease cost: £973
- Income tax rate: 40%
- Income Tax Saved (40% of £973): £389.20
- National Insurance (NI) Saved (12% of £973): £116.76
- Benefit In Kind (BIK) Paid @ 2% (2% of £73,135/12): £121.89
- Employer’s National Insurance (NI) on BiK (13.8% of £121.89): £16.82
Net Cost: £973 – £389.20 – £116.76 + £121.89 + £16.82 = £605.75
Tesla Salary Sacrifice Examples at a 45% tax rate
| Tesla Model | P11D Price | Monthly Lease Cost | Income Tax Saved (45% band) | NI Saved (12%) | BIK Paid @ 2% | Employer's NI on BiK (13.8%) | Net Cost (45% band) |
|---|---|---|---|---|---|---|---|
| Model 3 | £42,000 | £381 | £171.45 | £45.72 | £70 | £9.66 | £243.49 |
| Model Y | £44,990 | £403 | £181.35 | £48.36 | £75 | £10.35 | £258.64 |
| Model S | £55,935 | £898 | £404.10 | £107.76 | £93.23 | £12.86 | £492.23 |
| Model X | £73,135 | £973 | £437.85 | £116.76 | £121.89 | £16.82 | £556.30 |
Tesla Model 3 Salary Sacrifice Example @ 45% tax rate
- P11D list price £42,000
- Monthly lease cost: £381
- Income tax rate: 45%
- Income Tax Saved (45% of £381): £171.45
- National Insurance (NI) Saved (12% of £381): £45.72
- Benefit In Kind (BIK) Paid @ 2% (2% of £42,000/12): £70
- Employer’s National Insurance (NI) on BiK (13.8% of £70): £9.66
Net Cost: £381 – £171.45 – £45.72 + £70 + £9.66 = £243.49
Tesla Model Y Salary Sacrifice Example @ 45% tax rate
- P11D list price £44,990
- Monthly lease cost: £403
- Income tax rate: 45%
- Income Tax Saved (45% of £403): £181.35
- National Insurance (NI) Saved (12% of £403): £48.36
- Benefit In Kind (BIK) Paid @ 2% (2% of £44,990/12): £75
- Employer’s National Insurance (NI) on BiK (13.8% of £75): £10.35
Net Cost: £403 – £181.35 – £48.36 + £75 + £10.35 = £258.64
Tesla Model S Salary Sacrifice Example @ 45% tax rate
- P11D list price £55,935
- Monthly lease cost: £898
- Income tax rate: 45%
- Income Tax Saved (45% of £898): £404.10
- National Insurance (NI) Saved (12% of £898): £107.76
- Benefit In Kind (BIK) Paid @ 2% (2% of £55,935/12): £93.23
- Employer’s National Insurance (NI) on BiK (13.8% of £93.23): £12.86
Net Cost: £898 – £404.10 – £107.76 + £93.23 + £12.86 = £492.23
Tesla Model X Salary Sacrifice Example @ 45% tax rate
- P11D list price £73,135
- Monthly lease cost: £973
- Income tax rate: 45%
- Income Tax Saved (45% of £973): £437.85
- National Insurance (NI) Saved (12% of £973): £116.76
- Benefit In Kind (BIK) Paid @ 2% (2% of £73,135/12): £121.89
- Employer’s National Insurance (NI) on BiK (13.8% of £121.89): £16.82
Net Cost: £973 – £437.85 – £116.76 + £121.89 + £16.82 = £556.30
The final word on Tesla salary sacrifice examples
The salary sacrifice scheme can be a cost-effective way to drive a Tesla. In looking at the Model 3, Model Y, Model S, and Model X examples, you can see that the net monthly cost varies significantly depending on the P11D value of the vehicle, the income tax band of the employee, and the corresponding tax savings involved.
These examples have shown that the potential savings can be considerable, particularly for those in the higher tax bands.
However, it’s important to remember that the actual savings will depend on the specifics of your salary, the lease agreement, and other personal circumstances.
Furthermore, the tax benefits of electric vehicles make them particularly advantageous for salary sacrifice schemes. The Benefit In Kind (BIK) rates are significantly lower for Electric company cars compared to petrol cars, and this is reflected in the net costs in our examples. Other benefits include the possibility to bundle tyre replacement, windscreen replacement and even Tesla car insurance into the overall cost of a salary sacrifice scheme.
It’s also important to consider other factors such as the impact on pension contributions and eligibility for loans and mortgages, which may be affected by a reduction in your gross salary.
We hope this guide has served as a starting point to understand the potential financial implications of a salary sacrifice scheme when considering a Tesla.
- Free Ohme home charger
- 4,000 free miles of charging
- Intelligent Octopus EV tariff
- Public charging via Octopus Electroverse
- All EV's on the market
- Built-in early termination protection
Electric Car Guide does not provide tax advice. This article is for informational purposes only and is accurate at the time of writing. Be aware that UK tax legislation may change and you should consult your accountant if you need advice specific to your personal circumstance.
John is the Editor and Spokesperson for Electric Car Guide.
With over 20 years of writing experience, he has written for titles such as City AM, FE News and NerdWallet.com, covering various automotive and personal finance topics.
John’s market commentary has been covered by the likes of The Express, The Independent, Yahoo Finance and The Evening Standard.
