Leasing an EV via Personal Contract Hire (PCH) is often cheaper monthly than leasing an equivalent petrol car, because EVs currently hold their value well against strong demand and manufacturer-backed residuals. Through a workplace salary sacrifice scheme, the savings compound further: you pay for the lease from your gross salary before tax and National Insurance, and Benefit-in-Kind tax on a fully electric car is just 4% for 2026/27 (rising to 9% by 2029/30) — versus up to 37% for the highest-emission petrol/diesel cars. Typical EV lease terms run 24-48 months with mileage caps around 8,000-10,000 miles/year.
At a glance
| Factor | Detail |
|---|---|
| Typical lease term | 24-48 months |
| Typical mileage allowance | 8,000-10,000 miles/year, excess mileage charged at the end |
| EV company car BIK 2026/27 | 4%, rising to 9% by 2029/30 |
| Highest petrol/diesel BIK | Up to 37% in 2026/27 |
| Salary sacrifice benefit | Lease paid from gross salary, cutting income tax and NI, before the low EV BIK is applied |
How EV leasing (PCH) works
Personal Contract Hire is a fixed-term rental: you pay an initial payment (commonly equivalent to several months' rental) followed by fixed monthly payments for the agreed term, and hand the car back at the end with no ownership decision to make and nothing further to pay, provided you've stayed within the agreed mileage and returned it in fair condition. You never own the car, which suits drivers who want predictable costs and don't want the hassle of selling or part-exchanging.
Why EV leases are often cheaper than petrol equivalents
Lease pricing is driven largely by the car's predicted residual value at the end of the term — the smaller the expected drop in value, the lower your monthly payment, since you're only really paying for the depreciation the leasing company expects to happen. Strong demand and manufacturer-backed residual value guarantees have kept many EVs' predicted future values relatively high, which often makes their lease rates competitive with, or cheaper than, an equivalent petrol model, even though the EV's list price is usually higher.
Salary sacrifice: the biggest saving for company car drivers
A salary sacrifice EV scheme lets an employee "sacrifice" part of their gross salary in exchange for the leased EV, meaning the lease is effectively paid before income tax and National Insurance are deducted. Combined with the electric-only company car Benefit-in-Kind rate — 4% for 2026/27, rising by 1 percentage point to 5% in 2027/28, then by 2 points a year to a 9% cap in 2029/30 — this makes salary sacrifice EVs one of the most tax-efficient ways to get a new car in the UK, often cutting the effective monthly cost by a third or more compared with buying or leasing the same car privately. Petrol and diesel company cars, by contrast, carry BIK rates from roughly 17% up to 37% for 2026/27, which is why the tax gap between EV and combustion company cars remains so large.
What to check before signing an EV lease
- Mileage allowance — going over incurs a per-mile excess charge at the end; be realistic about your annual mileage upfront, since underestimating is a common costly mistake
- Charging costs — factor in home charging (cheapest, especially on an EV-specific electricity tariff) versus relying on public charging (more expensive per mile)
- Maintenance package — some EV leases bundle servicing and tyres into the monthly cost; check whether this is included or extra
- Early termination — ending a lease early is usually expensive; only commit to a term you're confident you'll keep
- Battery degradation and range — leasing sidesteps long-term battery degradation risk entirely, since you hand the car back before it becomes your problem
Who EV leasing suits — and who it doesn't
It suits drivers who want a new EV without a large upfront cost, who have predictable annual mileage, and — especially — employees with access to a salary sacrifice scheme through work. It suits high-mileage drivers less well unless the lease terms specifically allow for it, since excess-mileage charges can erode the savings quickly.
Always model your realistic annual mileage before signing — underestimating it on an EV lease is one of the most common and costly mistakes, since excess-mileage charges are applied per mile at the end of the agreement.
Frequently asked questions
Is leasing an electric car cheaper than leasing a petrol car?
What is salary sacrifice for an electric car?
What is the Benefit-in-Kind rate for an electric car in 2026/27?
Can I buy the car at the end of an EV lease?
What happens if I go over my mileage allowance on an EV lease?
Sources & further reading
- gov.uk — Expenses and benefits: company cars (BIK)
- gov.uk — Company car benefit: the appropriate percentage
- British Vehicle Rental and Leasing Association (BVRLA)
Figures, prices and policy details were current at the last-updated date above. Automotive pricing, incentives and regulations change frequently — verify time-sensitive details with the linked primary sources. Read our editorial policy and fact-checking standards.
