If you've seen headlines about Rachel Reeves and salary sacrifice, you might be wondering if your EV scheme is at risk. The short answer: it isn’t. Neither the Autumn Budget 2024 nor subsequent fiscal announcements have changed the tax treatment of electric vehicle salary sacrifice schemes.
Employer NIC raised from 13.8% to 15%, effective April 2025, with the employer NIC threshold reduced from £9,100 to £5,000 per year. EV BiK rate remains at 4% for 2026/27 with rates confirmed through to 2030/31.
Nothing has changed for employees, and employers now save more National Insurance when their staff join a scheme. An employer with 100 employees sacrificing £600 per month now saves around £8,640 more per year than before the NIC changes.
The impact of these changes varies based on your salary and tax bracket. Our updated calculator reflects the April 2025 NIC changes and shows your exact monthly savings under current rules.
Who Is Rachel Reeves And What Has She Changed?
Brief Context: Reeves Became Chancellor in July 2024; Autumn Budget Announced October 2024
Rachel Reeves became Chancellor in July 2024 and delivered her first Autumn Budget in October 2024. This budget focused on raising tax revenue to fund public spending commitments.
The NIC Change: 13.8% → 15% (April 2025), Threshold Lowered from £9,100 to £5,000
The policies announced in the Autumn Budget came into effect in April 2025, including those relating to National Insurance Contributions (NIC).
Before April 2025, the employer NIC rate was 13.8% with a secondary threshold of £9,100. The employer NIC rate was increased to 15%, effective from April 2025, with the secondary threshold dropped to £5,000.
Summary table of what's changed: EV Salary Sacrifice, Cycle-To-Work, Pension Contributions
Learn how salary sacrifice car schemes work with our updated 2026 guide, covering eligibility and the step-by-step process to get started.
What Did The Autumn Budget Mean For Salary Sacrifice?
The headline changes affect employer National Insurance Contributions, but they did not change the underlying salary sacrifice rules. No changes were made to EV salary sacrifice in the Autumn Budget 2024, Spring Statement 2025, or Spending Review 2025.
Ultra-low emission vehicles retain favourable treatment under the OpRA framework, meaning employees continue to be taxed using the normal Benefit-in-Kind rules rather than losing the tax advantage.
Before/After NIC table — Employer Saving Per £1 Of Salary Sacrificed
The savings generated by salary sacrifice have increased as a result of the 2024 Autumn Budget. Employers now save 15p per £1 sacrificed, compared to 13.8p pre-April 2025.
The Protected Status of EV Salary Sacrifice Under HMRC OpRA Rules
Optional Remuneration Arrangements (OpRA) were introduced to restrict tax advantages for many salary sacrifice benefits. However, ultra-low emission vehicles continue to receive favourable treatment under the OpRA rules, and employees continue to be taxed under EV Benefit in Kind rules.
No changes have been announced by Reeves in relation to EV salary sacrifice schemes. Read our in-depth guide on EV Benefit in Kind rates, including how they’re calculated with real car examples.
Why The NIC Increase Inadvertently Increased Employer Savings On EV Schemes
When a salary is sacrificed, the employer’s NIC liability falls. The new higher NIC rates have increased the value of that reduction. The Budget has made salary sacrifice more attractive from an employer’s perspective.
Let’s see this in practice.
Employer Savings Example:
A company has 100 employees, who each make a £600 monthly sacrifice for an annual sacrifice of £7,200 per employee.
Before April 2025:
£7,200 x 13.8% = £993.60 per employee
100 employees = £99,360
After April 2025:
£7,200 x 15% = £1,080 per employee
100 employees = £108,000
The same company now makes an additional NIC saving of £8,640 annually. For employers, the economics of EV salary sacrifice have improved even more after the Budget, rather than worsened.
Is EV salary Sacrifice Still Worth It After Reeves' Changes?
EV salary sacrifice is more valuable after the changes implemented by Rachel Reeves in the 2024 Autumn Budget. Read our full Autumn Budget breakdown to learn more.
Employee Perspective: Income Tax + NI Savings Unchanged; BIK At 4% Unchanged
The Autumn Budget did not change the Income Tax relief available through salary sacrifice arrangements. The BiK for 2026/27 remains at 4%, increasing to 5% for the 2027/28 tax year.
Let’s see this in practice:
An employee on a £55,000 salary makes a monthly sacrifice of £500. They’ll save £200 in Income Tax and £10 in employee National Insurance, assuming earnings remain above the Upper Earnings Limit, where employee NIC is charged at 2%.
They will also be subject to BiK tax at 4%. The exact BiK tax depends on the employee’s tax rate and the vehicle’s P11D value. We can test this by using a Tesla Model Y with a £52,990 P11D.
2026/27 BiK: £52,990 x 4% = £2,119.60
40% taxpayer:
£2,119.60 x 40% = £847.84 annually
= £70.65/month.
The net cost (~£360 per month) remains significantly lower than funding the same vehicle from take-home pay.
Loveelectric drivers save an average of £290/month on their lease cost with access to a full inventory of electric vehicles, from cutting-edge models to budget-friendly options.
Employer Perspective: Stronger Case Than Ever
Every participating employee in an EV salary sacrifice scheme now generates a larger NIC saving than before. A salary sacrifice scheme is one of the best ways to offset the costs of the higher NIC rate.
The Confirmed BIK Roadmap To 2030/31 — Government Commitment To EV Incentives
The government has already confirmed the EV BiK roadmap until at least 2030/31 with gradual year-on-year increases.
Even at the 10% rate in 2030/31, EV BiK remains substantially lower than petrol and diesel equivalents to incentivise sign-ups to salary sacrifice schemes. Calculate your savings under the current tax rules using our salary sacrifice calculator.
What About The 2029 Salary Sacrifice Rule Changes?
Some industry commentary has focused on possible post-2029 reforms to salary sacrifice arrangements, but no legislation affecting EV salary sacrifice has been announced. These suggested reforms are totally separate from Rachel Reeves’ National Insurance changes.
So far, proposed changes to salary sacrifice rules from 2029 are primarily focused on enhanced pension contributions.
Ultra-low emission vehicles continue to have protected status within the current framework. At the time of writing, there is no confirmed policy that would remove EV salary sacrifice incentives.
What Should You Do Now?
If you’re already in an EV salary sacrifice scheme, there’s no action required. Tax treatment remains unchanged, but you can check with your HR department or scheme provider if you have a specific concern.
Employers who do not currently offer EV salary sacrifice have the potential to make larger NIC savings than before, making the scheme even more cost-effective. Onboarding remains straightforward, and employee demand continues to strengthen for EV salary sacrifice schemes.
The NIC rate increase may be the strongest financial case for introducing a scheme since EV salary sacrifice became mainstream. Our guide to employer pros and cons of EV salary sacrifice can help you decide if a scheme is right for your business.
Frequently Asked Questions
Did Rachel Reeves cut salary sacrifice for electric cars?
No, neither the 2024 Autumn Budget nor subsequent fiscal announcements have changed the tax treatment of EV salary sacrifice schemes in the UK.
How did the October 2024 Autumn Budget affect EV salary sacrifice?
The Budget increased employer National Insurance rates. It did not change EV salary sacrifice rules, Benefit-in-Kind rates, or employee tax savings. The increased NI rate means that employers now make greater savings through an EV salary sacrifice scheme.
Is salary sacrifice still exempt from the NIC changes?
No benefit is exempt from the NIC changes themselves. However, salary sacrifice still reduces employer NIC liability, which means the savings generated by EV schemes have actually increased post-April 2025.
What did Reeves change about employer National Insurance?
The employer NIC rate increased from 13.8% to 15%, and the secondary threshold reduced from £9,100 to £5,000 per year, from April 2025.
Will salary sacrifice be reformed again under Reeves?
There is currently no announced policy to remove EV salary sacrifice incentives. Any future reforms would require consultation and legislation before taking effect.
EV salary sacrifice remains one of the most tax-efficient ways to access an electric vehicle. With average savings of around £290 per month and employer NIC savings now higher than ever, it’s never been a better time to see what an EV salary sacrifice scheme could save you. Use our eligibility checker and calculate your savings under the new rules.
