Taking a Volvo via a salary sacrifice offers a balance of style, functionality, and safety – alongside some pretty appealing tax savings!
For those considering a Volvo vehicle under a salary sacrifice scheme, it is important to understand the financial breakdown of the deductions. In our Volvo salary sacrifice examples, we have broken down the potential savings and costs associated with an electric car salary sacrifice scheme for some of Volvo’s most popular models: the Volvo C40 Recharge, Volvo XC40 Recharge and the Volvo EX90.
We looked at three income tax bands: 20%, 40%, and 45% and explored the deductions and net salary sacrifice costs. As always this information is for guidance only and your personal tax circumstances should be considered before applying to a scheme.
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How we calculated our Volvo 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 to 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. - Monthly lease cost
We took this figure from the current Octopus Electric Vehicles price.
These calculations provide a starting point for understanding how an electric car salary sacrifice scheme could impact your monthly outgoings if you were to lease or subscribe to a Volvo. They should be used as a guide rather than definitive advice, and it is always recommended to consult with an accountant for personalised advice.
Volvo Salary Sacrifice examples @ 20% tax rate
| Volvo 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) |
|---|---|---|---|---|---|---|---|
| Volvo C40 | £48,355 | £720 | £144 | £14.40 | £80.59 | £11.12 | £642.19 |
| Volvo XC40 | £46,505 | £737 | £147.40 | £14.74 | £77.51 | £10.68 | £652.37 |
| Volvo EX90 | £96,255 | £1632 | £326.40 | £32.64 | £160.43 | £22.14 | £1,433.39 |
Volvo C40 Recharge Salary Sacrifice example @ 20% tax rate
- P11D list price: £48,355
- Monthly lease cost: £720
- Income tax rate: 20%
- Income tax Saved: £720 x 20% = £144
- National Insurance (NI) Saved: £720 x 2% = £14.40
- Benefit In Kind (BIK) Paid @ 2%: (£48,355 x 2%) ÷ 12 = £80.59
- Employer’s National Insurance (NI) on BiK: (£80.59 x 13.8%) = £11.12
Net monthly cost: £720 – £144 – £14.40 + £80.59 = £642.19
Volvo XC40 Recharge Salary Sacrifice example @ 20% tax rate
- P11D list price: £46,505
- Monthly lease cost: £737
- Income tax rate: 20%
- Income tax Saved: £737 x 20% = £147.40
- National Insurance (NI) Saved: £737 x 2% = £14.74
- Benefit In Kind (BIK) Paid @ 2%: (£46,505 x 2%) ÷ 12 = £77.51
- Employer’s National Insurance (NI) on BiK: (£77.51 x 13.8%) = £10.68
Net monthly cost: £737 – £147.40 – £14.74 + £77.51 = £652.37
Volvo EX90 Salary Sacrifice example @ 20% tax rate
- P11D list price: £96,255
- Monthly lease cost: £1632
- Income tax rate: 20%
- Income tax Saved: £1632 x 20% = £326.40
- National Insurance (NI) Saved: £1632 x 2% = £32.64
- Benefit In Kind (BIK) Paid @ 2%: (£96,255 x 2%) ÷ 12 = £160.43
- Employer’s National Insurance (NI) on BiK: (£160.43 x 13.8%) = £22.14
Net monthly cost: £1632 – £326.40 – £32.64 + £160.43 = £1,433.39
Volvo Salary Sacrifice examples @ 40% tax rate
| Volvo 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) |
|---|---|---|---|---|---|---|---|
| Volvo C40 | £48,355 | £720 | £288 | £14.40 | £80.59 | £11.12 | £498.19 |
| Volvo XC40 | £46,505 | £737 | £294.80 | £14.74 | £77.51 | £10.68 | £504.97 |
| Volvo EX90 | £96,255 | £1632 | £652.80 | £32.64 | £160.43 | £22.14 | £1,106.99 |
Volvo C40 Recharge Salary Sacrifice example @ 40% tax rate
- P11D list price: £48,355
- Monthly lease cost: £720
- Income tax rate: 40%
- Income tax Saved: £720 x 40% = £288
- National Insurance (NI) Saved: £720 x 2% = £14.40
- Benefit In Kind (BIK) Paid @ 2%: (£48,355 x 2%) ÷ 12 = £80.59
- Employer’s National Insurance (NI) on BiK: (£80.59 x 13.8%) = £11.12
Net monthly cost: £720 – £288 – £14.40 + £80.59 = £498.19
Volvo XC40 Recharge Salary Sacrifice example @ 40% tax rate
- P11D list price: £46,505
- Monthly lease cost: £737
- Income tax rate: 40%
- Income tax Saved: £737 x 40% = £294.80
- National Insurance (NI) Saved: £737 x 2% = £14.74
- Benefit In Kind (BIK) Paid @ 2%: (£46,505 x 2%) ÷ 12 = £77.51
- Employer’s National Insurance (NI) on BiK: (£77.51 x 13.8%) = £10.68
Net monthly cost: £737 – £294.80 – £14.74 + £77.51 = £504.97
Volvo EX90 Salary Sacrifice example @ 40% tax rate
- P11D list price: £96,255
- Monthly lease cost: £1632
- Income tax rate: 40%
- Income tax Saved: £1632 x 40% = £652.80
- National Insurance (NI) Saved: £1632 x 2% = £32.64
- Benefit In Kind (BIK) Paid @ 2%: (£96,255 x 2%) ÷ 12 = £160.43
- Employer’s National Insurance (NI) on BiK: (£160.43 x 13.8%) = £22.14
Net monthly cost: £1632 – £652.80 – £32.64 + £160.43 = £1,106.99
Volvo Salary Sacrifice examples @ 45% tax rate
| Volvo 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) |
|---|---|---|---|---|---|---|---|
| Volvo C40 | £48,355 | £720 | £324 | £14.40 | £80.59 | £11.12 | £462.19 |
| Volvo XC40 | £46,505 | £737 | £331.65 | £14.74 | £77.51 | £10.68 | £468.12 |
| Volvo EX90 | £96,255 | £1632 | £734.40 | £32.64 | £160.43 | £22.14 | £1,025.39 |
Volvo C40 Recharge Salary Sacrifice example @ 45% tax rate
- P11D list price: £48,355
- Monthly lease cost: £720
- Income tax rate: 45%
- Income tax Saved: £720 x 45% = £324
- National Insurance (NI) Saved: £720 x 2% = £14.40
- Benefit In Kind (BIK) Paid @ 2%: (£48,355 x 2%) ÷ 12 = £80.59
- Employer’s National Insurance (NI) on BiK: (£80.59 x 13.8%) = £11.12
Net monthly cost: £720 – £324 – £14.40 + £80.59 = £462.19
Volvo XC40 Recharge Salary Sacrifice example @ 45% tax rate
- P11D list price: £46,505
- Monthly lease cost: £737
- Income tax rate: 45%
- Income tax Saved: £737 x 45% = £331.65
- National Insurance (NI) Saved: £737 x 2% = £14.74
- Benefit In Kind (BIK) Paid @ 2%: (£46,505 x 2%) ÷ 12 = £77.51
- Employer’s National Insurance (NI) on BiK: (£77.51 x 13.8%) = £10.68
Net monthly cost: £737 – £331.65 – £14.74 + £77.51 = £468.12
Volvo EX90 Salary Sacrifice example @ 45% tax rate
- P11D list price: £96,255
- Monthly lease cost: £1632
- Income tax rate: 45%
- Income tax Saved: £1632 x 45% = £734.40
- National Insurance (NI) Saved: £1632 x 2% = £32.64
- Benefit In Kind (BIK) Paid @ 2%: (£96,255 x 2%) ÷ 12 = £160.43
- Employer’s National Insurance (NI) on BiK: (£160.43 x 13.8%) = £22.14
Net monthly cost: £1632 – £734.40 – £32.64 + £160.43 = £1,025.39
The final word on Volvo salary sacrifices
Having reviewed a selection of Volvo’s salary sacrifice range, we can see the benefits of salary sacrifice with tangible savings on offer for employees, irrespective of their income tax band. The more premium the model, such as the EX90, the higher the potential monetary benefits due to the larger price and monthly lease costs.
If you are in a higher tax bracket you will benefit from the most savings, especially with the more luxurious models. The XC40 Recharge and C40 Recharge, while slightly more budget-friendly, also offer good salary sacrifice savings.
The tax advantages are clear but before signing up for an electric car salary sacrifice scheme you should consider your financial situation and lifestyle needs. It is not always possible to exit a salary sacrifice scheme early without incurring penalties – be sure to check with the specific provider you choose before committing.
- 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
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.
