Police car salary sacrifice explained

You agree to give up part of your gross pay each month in exchange for a car your force leases for you. The package usually includes insurance, servicing, tyres and breakdown cover. Because the pay you give up never reaches you as salary, you pay no income tax or National Insurance on it. Instead, the car is a taxable benefit, so you pay benefit-in-kind tax on it through your tax code or, from April 2027, through your payslip.

1. You get a quote through your force’s provider portal. It shows a gross monthly sacrifice, the car’s list price (its P11D value) and its CO2 figure.
2. Your contract changes for the length of the lease, usually two to four years. Your basic pay on the payslip goes down by the sacrifice.
3. Tax and NI are worked out on the lower pay. You save tax at your marginal rate and NI at 8% (or 2% on pay above £50,270).
4. The car benefit is added back. The list price times the appropriate percentage is added to your taxable income each year. For an electric car that is 4% in 2026/27, rising each April.
5. Your employer saves too. It pays no employer NI on the sacrificed pay, but pays Class 1A NI on the car benefit.

Cars with CO2 of 75g/km or less are taxed on the normal company car rules. Above 75g/km the “optional remuneration” rules apply and you are taxed on whichever is higher: the car benefit or the pay you gave up. That wipes out most of the tax saving, which is why force schemes limit cars to 50g/km (Kent and Essex) or 75g/km (Cumbria).

Which forces offer it

From force policies, careers pages and procurement notices we read on 9 October 2026. This is not a complete list.

Police staff are in the Local Government Pension Scheme, not the police schemes, and Cumbria confirms staff pensionable pay is reduced. This guide is about officers.

Here is the arithmetic for the constable on pay point 4 (£36,335) with the £475 a month car, for 2026/27, so you can check it against your own payslip and quote. Case A is a pension based on pay before the sacrifice (the position in the regulations and the forces we found); Case B is a pension based on the reduced pay.

1. Pay given up: £475 × 12 = £5,700 a year. Gross pay falls from £36,335 to £30,635.
2. Pension contributions: 12.88% (pay of £37,035 or less). Case A: still £4,680 a year, on the full pay. Case B: 12.88% of £30,635.
3. Taxable pay before: £36,335 less £4,680 = £31,655, all within the basic rate band.
4. Tax saved: in Case A, 20% of £5,700 = £1,140 a year (£95 a month). In Case B slightly less, because the lower contributions leave more pay taxable.
5. NI saved: 8% of £5,700 = £456 a year (£38 a month), because all of it is between the NI thresholds.
6. Car benefit: £30,205 × 4% = £1,208 added to taxable pay, taxed at 20% = £242 a year (about £20 a month).
7. Net cost: £475 less £95 tax saved, less £38 NI saved, plus about £20 benefit-in-kind tax = about £362 a month in Case A.

In Case B, the pension contributions saved (£61 a month) bring the cost down to about £313. That is the figure a generic provider calculator would show you. The difference is the pension you keep.

Income tax and NI

Police pension contributions are taken before tax, so your taxable pay is your pay after the sacrifice, less contributions. Tax is saved at your highest rate. NI is saved at 8% on pay between £12,570 and £50,270 a year and 2% above that, worked out on each month’s pay. Then the car benefit is added to your taxable pay. Because the benefit is added at your marginal rate, the benefit-in-kind tax is roughly list price × percentage × your tax rate, but the calculator works it out exactly across band edges.

The car benefit can push you into a higher band or over £100,000, where the personal allowance starts to taper. The calculator includes the benefit when it checks both.

Student loans

Repayments use the same earnings as Class 1 NI: your pay after the sacrifice, with no car benefit added. For 2026/27 the thresholds are £26,900 (Plan 1), £29,385 (Plan 2), £33,795 (Plan 4) and £25,000 (Plan 5), all at 9%, and £21,000 for postgraduate loans at 6%. If you are above the threshold, you repay 9% of the pay given up less, which lowers your monthly cost a little. The basis is from HMRC’s collection guidance as summarised; we did not open the page text.

The High Income Child Benefit Charge: a sergeant around £60,000

The charge is 1% of your child benefit for every £200 of adjusted net income over £60,000, and all of it at £80,000. The sacrifice lowers your adjusted net income, but the car benefit is taxable income and adds back. The net change is the sacrifice less the car benefit.

National Insurance changes in the news

The National Insurance Contributions (Employer Pensions Contributions) Act 2026 caps NI relief on pension salary sacrifice at £2,000 from 2029/30. It does not apply to cars. Police officers do not use pension salary sacrifice anyway, because the police schemes take contributions before tax.

Overtime under Annex G is paid at “a twenty-fourth of a day’s pay for each completed period of 15 minutes”, where a day’s pay is the member’s pay for the week divided by five. The question is whether “pay” means your pay before or after the sacrifice.

HMRC says the employer decides how “overtime rates and pay rises are calculated. Such payments can be based on the notional salary or the new reduced cash salary, but this must be made clear to the employee.” We found no force or Federation statement on which applies to officers. Cumbria’s policy answers “Yes” to a potential impact on earnings-related benefits but says nothing about overtime.

Allowances. London Weighting is pensionable; the London Allowance and South East Allowance are not. The calculator treats them that way. Business mileage: with a salary sacrifice car, business miles are repaid at the advisory electricity rate (7p a mile for home charging, 15p public, from 1 September 2026), not the 55p own-car rate that applies from 2026/27. Cumbria confirms officers on its scheme get the lower rate. If you claim business miles in your own car now, you lose the difference.

The Police Pension Scheme (Scotland) Regulations 2015 contain the same voluntary surrender wording (regulation 25(2)(e)), and Scottish officers pay a flat 13.7% contribution rate, so there is no band to drop into. Scottish income tax has more bands, and the 42% higher rate starts at £43,663, so many Scottish officers save more tax per pound sacrificed.

At the same pay (£54,597, the top of the Scottish constable scale) and our standard car, the monthly cost in Case A is about £320 in Scotland against £384 in England and Wales, because the Scottish officer saves £160 a month in tax against £95.

We found no Police Scotland car salary sacrifice scheme. Student loan Plan 4 applies to most Scottish graduates.

Every figure on this page comes from the same engine as the calculator. It works out your take-home pay before and after the sacrifice for each tax year of the lease, and the difference is the cost.

• Tax and NI: 2026/27 England and Wales or Scottish bands, with the personal allowance tapered over £100,000; NI worked out per monthly pay period. Bands are held at 2026/27 levels for later years.
• Pension contributions: 12.88%, 13.88% or 14.22% from 1 April 2026 (SI 2026/267), or 13.7% in Scotland, taken before tax. In Case B a lower band applies from the second scheme year.
• Car benefit: list price × the legislated percentage for each tax year, added to taxable pay; over 75g/km, the greater of that and the pay given up.
• Student loans and child benefit charge: 2026/27 thresholds; child benefit at £1,407 a year for the eldest child and £931 for each other child.
• Pension (Case B): 1/55.3 of the pay given up for each year, revalued at 1.25% a year above prices until retirement, shown in today’s money.
• Allowances: London Weighting counted as pensionable, London and South East Allowances as taxable but not pensionable; overtime taxable but not pensionable.

It is an estimate. Your payslip, your tax code and your force’s scheme terms decide what actually happens.