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Last updated: 19 March 2026

Salary sacrifice vehicle schemes can look simple: an employee gives up part of their gross salary and, in return, gets access to a car (and sometimes a van) as a benefit.

In practice, the tax outcome depends on Benefit-in-Kind (BIK) rules and HMRC’s optional remuneration arrangements (OpRA) rules — and the admin and “leaver risk” can be the biggest make-or-break factor for employers.

This guide covers what matters most if you’re deciding whether a vehicle salary sacrifice scheme is right for your business.

What is a salary sacrifice arrangement?

A salary sacrifice arrangement is where an employee agrees to give up part of their cash pay in return for a non-cash benefit. HMRC treats many salary sacrifice setups as “optional remuneration arrangements” (OpRA). Under OpRA, the taxable value is usually the greater of:

• the salary/cash pay the employee gives up, and
• the taxable value under the normal benefit rules.

That “greater of” test is why salary sacrifice doesn’t automatically create savings for every benefit.

Why EVs are often the focus

Two HMRC rules make low-emission cars (including fully electric) the obvious starting point for most salary sacrifice vehicle schemes:

Low BIK percentages for 2025/26

For the 2025/26 tax year, HMRC’s published table shows 0g/km cars at 3% (WLTP and NEDC shown), which is much lower than typical petrol/diesel percentages.

OpRA doesn’t apply to cars at 75g CO2/km or less

HMRC’s OpRA guidance says the OpRA comparison does not apply to cars with CO2 emissions of 75g/km or less. In those cases, the employee is taxed under the normal company car rules without having to compare against salary given up.

Put simply: where BIK is low, salary sacrifice is more likely to be attractive.

What about vans?

Vans have their own (flat-rate) benefit rules when a company van is available for private use. HMRC’s published figures confirm:

• the van benefit charge for 2025/26 is £4,020 (and increases to £4,170 for 2026/27), and
• zero-emission vans can be nil for the van benefit charge (depending on the tax year and conditions).

Because vans are often provided for work, the biggest practical issue is whether there’s any private use and how it’s defined/controlled — that’s what tends to drive the tax position.

Employer essentials to check before you launch a scheme

1) National Minimum Wage (NMW) compliance

HMRC guidance is clear: salary sacrifice must not reduce an employee’s cash earnings below National Minimum Wage rates, and employers need procedures to prevent that.

This alone can exclude lower-paid employees or require caps, which affects take-up and scheme viability.

2) Leavers, maternity/paternity changes and early termination risk

If an employee leaves, changes role, or goes on leave, the lease still exists. You’ll need a policy for:

• early termination charges
• replacement drivers / vehicle returns
• what happens if salary sacrifice must stop (for example, NMW constraints)

Many employers treat this as the main commercial risk and build it into scheme design and comms.

3) What’s actually included

Vehicle salary sacrifice packages often include things like servicing, tyres, breakdown cover and insurance — but inclusions vary by provider and price point. Treat “all-in” as a scheme choice, not a given.

4) Payroll, reporting and employee understanding

OpRA/BIK rules affect how benefits are valued and reported. HMRC’s OpRA guidance explains the “relevant amount” approach and how amounts made good can reduce taxable value in some cases.

In plain English: you need payroll and HR aligned, and employees need a clear explanation of (a) take-home pay impact and (b) tax impact.

When a salary sacrifice vehicle scheme tends to fit best

It often works best when you have:

• enough eligible employees above NMW thresholds
• relatively stable employment patterns (lower turnover)
• a clear EV strategy (or low-emission vehicle policy)
• capacity to run comms, payroll and leaver processes properly

And it’s less likely to fit when turnover is high, earnings are close to NMW for a large part of your workforce, or you’re expecting frequent restructures.

F) SOURCES

1. GOV.UK (HMRC) — Salary sacrifice for employers (effects on PAYE; NMW restriction): View source
2. GOV.UK (HMRC) — Optional remuneration arrangements (OpRA): View source
3. GOV.UK (HMRC) — Optional remuneration arrangements Appendix 12: View source
4. GOV.UK (HMRC) — Company car benefit percentages: View source
5. GOV.UK — Van benefit charge (2026–27): View source
6. GOV.UK — Van benefit charge overview: View source
7. GOV.UK (HMRC PDF) — P11D Working Sheet 3: View source