In this guide, we explore the financial savings that leasing an electric Volkswagen via a salary sacrifice scheme has to offer.
With VW’s impressive range of EV salary sacrifice options, there’s no better time to look into how much you can save on your tax and NI. We have provided examples for four VW electric models: the VW ID.3, VW ID.4, VW ID.5, and the VW ID.Buzz.
Using each model’s P11D list price and the typical monthly lease costs, we’ve provided a breakdown across three income tax bands – 20%, 40%, and 45%.
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How we calculated our VW 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 EV salary sacrifice scheme could impact your monthly outgoings if you were to lease or subscribe to a VW. They should be used as a guide rather than definitive advice, and it is always recommended to consult with an accountant for personalised advice.
VW Salary Sacrifice example @ 20% tax rate
| Volkswagen 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) |
|---|---|---|---|---|---|---|---|
| VW ID.3 | £37,115 | £471 | £94.20 | £9.42 | £61.86 | £8.52 | £429.24 |
| VW ID.4 | £38,845 | £557 | £111.40 | £11.14 | £64.74 | £8.93 | £499.20 |
| VW ID.5 | £50,710 | £836 | £167.20 | £16.72 | £84.52 | £11.66 | £736.60 |
| VW ID.Buzz | £58,915 | £849 | £169.80 | £16.98 | £98.19 | £13.55 | £760.41 |
VW ID.3 Salary Sacrifice example @ 20% tax rate
- P11D list price: £37,115
- Monthly lease cost: £471
- For an Income tax rate of 20%
- Income Tax Saved: £471 x 20% = £94.20
- National Insurance (NI) Saved: £471 x 2% = £9.42
- Benefit In Kind (BIK) Paid @ 2%: (£37,115 x 2%) ÷ 12 = £61.86
- Employer’s National Insurance (NI) on BiK: (£61.86 x 13.8%) = £8.52
Net Monthly Cost: £471 – £94.20 – £9.42 + £61.86 = £429.24
VW ID.4 Salary Sacrifice example @ 20% tax rate
- P11D list price: £38,845
- Monthly lease cost: £557
- Income Tax Saved: £557 x 20% = £111.40
- National Insurance (NI) Saved: £557 x 2% = £11.14
- Benefit In Kind (BIK) Paid @ 2%: (£38,845 x 2%) ÷ 12 = £64.74
- Employer’s National Insurance (NI) on BiK: (£64.74 x 13.8%) = £8.93
Net Cost: £557 – £111.40 – £11.14 + £64.74 = £499.20
VW ID.5 Salary Sacrifice example @ 20% tax rate
- P11D list price: £50,710
- Monthly lease cost: £836
- Income Tax Saved: £836 x 20% = £167.20
- National Insurance (NI) Saved: £836 x 2% = £16.72
- Benefit In Kind (BIK) Paid @ 2%: (£50,710 x 2%) ÷ 12 = £84.52
- Employer’s National Insurance (NI) on BiK: (£84.52 x 13.8%) = £11.66
Net Cost: £836 – £167.20 – £16.72 + £84.52 = £736.60
VW ID.Buzz Salary Sacrifice example @ 20% tax rate
- P11D list price: £58,915
- Monthly lease cost: £849
- Income Tax Saved: £849 x 20% = £169.80
- National Insurance (NI) Saved: £849 x 2% = £16.98
- Benefit In Kind (BIK) Paid @ 2%: (£58,915 x 2%) ÷ 12 = £98.19
- Employer’s National Insurance (NI) on BiK: (£98.19 x 13.8%) = £13.55
Net Cost: £849 – £169.80 – £16.98 + £98.19 = £760.41
VW Salary Sacrifice example @ 40% tax rate
| Volkswagen 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) |
|---|---|---|---|---|---|---|---|
| VW ID.3 | £37,115 | £471 | £188.40 | £9.42 | £61.86 | £8.52 | £335.04 |
| VW ID.4 | £38,845 | £557 | £222.80 | £11.14 | £64.74 | £8.93 | £387.80 |
| VW ID.5 | £50,710 | £836 | £334.40 | £16.72 | £84.52 | £11.66 | £569.40 |
| VW ID.Buzz | £58,915 | £849 | £339.60 | £16.98 | £98.19 | £13.55 | £590.61 |
VW ID.3 Salary Sacrifice example @ 40% tax rate
- P11D list price: £37,115
- Monthly lease cost: £471
- For an Income tax rate of 40%:
- Income Tax Saved: £471 x 40% = £188.40
- National Insurance (NI) Saved: £471 x 2% = £9.42
- Benefit In Kind (BIK) Paid @ 2%: (£37,115 x 2%) ÷ 12 = £61.86
- Employer’s National Insurance (NI) on BiK: (£61.86 x 13.8%) = £8.52
Net Monthly Cost: £471 – £188.40 – £9.42 + £61.86 = £335.04
VW ID.4 Salary Sacrifice example @ 40% tax rate
- P11D list price: £38,845
- Monthly lease cost: £557
- Income Tax Saved: £557 x 40% = £222.80
- National Insurance (NI) Saved: £557 x 2% = £11.14
- Benefit In Kind (BIK) Paid @ 2%: (£38,845 x 2%) ÷ 12 = £64.74
- Employer’s National Insurance (NI) on BiK: (£64.74 x 13.8%) = £8.93
Net Cost: £557 – £222.80 – £11.14 + £64.74 = £387.80
VW ID.5 Salary Sacrifice example @ 40% tax rate
- P11D list price: £50,710
- Monthly lease cost: £836
- Income Tax Saved: £836 x 40% = £334.40
- National Insurance (NI) Saved: £836 x 2% = £16.72
- Benefit In Kind (BIK) Paid @ 2%: (£50,710 x 2%) ÷ 12 = £84.52
- Employer’s National Insurance (NI) on BiK: (£84.52 x 13.8%) = £11.66
Net Cost: £836 – £334.40 – £16.72 + £84.52 = £569.40
VW ID.Buzz Salary Sacrifice example @ 40% tax rate
- P11D list price: £58,915
- Monthly lease cost: £849
- Income Tax Saved: £849 x 40% = £339.60
- National Insurance (NI) Saved: £849 x 2% = £16.98
- Benefit In Kind (BIK) Paid @ 2%: (£58,915 x 2%) ÷ 12 = £98.19
- Employer’s National Insurance (NI) on BiK: (£98.19 x 13.8%) = £13.55
Net Cost: £849 – £339.60 – £16.98 + £98.19 = £590.61
VW Salary Sacrifice example @ 45% tax rate
| Volkswagen 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) |
|---|---|---|---|---|---|---|---|
| VW ID.3 | £37,115 | £471 | £211.95 | £9.42 | £61.86 | £8.52 | £311.49 |
| VW ID.4 | £38,845 | £557 | £250.65 | £11.14 | £64.74 | £8.93 | £359.95 |
| VW ID.5 | £50,710 | £836 | £376.20 | £16.72 | £84.52 | £11.66 | £527.60 |
| VW ID.Buzz | £58,915 | £849 | £382.05 | £16.98 | £98.19 | £13.55 | £548.16 |
VW ID.3 Salary Sacrifice example @ 45% tax rate
- P11D list price: £37,115
- Monthly lease cost: £471
- For an Income tax rate of 45%
- Income Tax Saved: £471 x 45% = £211.95
- National Insurance (NI) Saved: £471 x 2% = £9.42
- Benefit In Kind (BIK) Paid @ 2%: (£37,115 x 2%) ÷ 12 = £61.86
- Employer’s National Insurance (NI) on BiK: (£61.86 x 13.8%) = £8.52
Net Monthly Cost: £471 – £211.95 – £9.42 + £61.86 = £311.49
VW ID.4 Salary Sacrifice example @ 45% tax rate
- P11D list price: £38,845
- Monthly lease cost: £557
- Income Tax Saved: £557 x 45% = £250.65
- National Insurance (NI) Saved: £557 x 2% = £11.14
- Benefit In Kind (BIK) Paid @ 2%: (£38,845 x 2%) ÷ 12 = £64.74
- Employer’s National Insurance (NI) on BiK: (£64.74 x 13.8%) = £8.93
Net Cost: £557 – £250.65 – £11.14 + £64.74 = £359.95
VW ID.5 Salary Sacrifice example @ 45% tax rate
- P11D list price: £50,710
- Monthly lease cost: £836
- Income Tax Saved: £836 x 45% = £376.20
- National Insurance (NI) Saved: £836 x 2% = £16.72
- Benefit In Kind (BIK) Paid @ 2%: (£50,710 x 2%) ÷ 12 = £84.52
- Employer’s National Insurance (NI) on BiK: (£84.52 x 13.8%) = £11.66
Net Cost: £836 – £376.20 – £16.72 + £84.52 = £527.60
VW ID.Buzz Salary Sacrifice example @ 45% tax rate
- P11D list price: £58,915
- Monthly lease cost: £849
- Income Tax Saved: £849 x 45% = £382.05
- National Insurance (NI) Saved: £849 x 2% = £16.98
- Benefit In Kind (BIK) Paid @ 2%: (£58,915 x 2%) ÷ 12 = £98.19
- Employer’s National Insurance (NI) on BiK: (£98.19 x 13.8%) = £13.55
Net Cost: £849 – £382.05 – £16.98 + £98.19 = £548.16
The final word on Volkswagen’s Salary Sacrifice schemes
When we look at the breakdown of the four Volkswagen electric vehicles, there are clear tax benefits in a salary sacrifice scheme. The higher your tax band, the more you can save in income tax under a VW salary sacrifice scheme. This can lead to substantial monthly savings, especially for higher-end V2H compatible cars like the VW ID.Buzz.
It’s clear from our examples that VW salary sacrifice can be a financially savvy choice. The monthly net costs, especially for those in the 40% and 45% tax brackets, can be significantly lower than the actual monthly lease costs.
However, while our examples provide an overview, it’s essential to remember that they are just examples. Your individual circumstances will impact your tax and the affordability of a VW scheme. If in doubt, speak to an accountant to ensure you choose the best EV salary sacrifice for your own tax situation.
- 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.
