Electric Car Leasing Explained: PCH, PCP, Salary Sacrifice and What a Good Deal Looks Like

Electric car leasing, usually sold as personal contract hire (PCH), means paying an initial rental and then a fixed monthly fee to drive a new electric car for a set term and mileage, then handing it back. A good deal is judged on the total you pay over the term: Jaecoo’s E5 offer advertises £345.12 a month, but the real cost is £393.05 a month once the £2,070.72 initial rental is spread across the 36 months.

Leasing suits drivers who want a new EV with a fixed monthly cost and no worry about what it will be worth in three years. It does not suit anyone who keeps cars for a decade, drives far more than the allowance, or wants something to sell at the end. Our guide to leasing vs buying an EV sets out the ownership side in full; this page explains how the lease products work and how to tell a good deal from a headline price.

How does electric car leasing work?

You agree a term, an annual mileage and an initial rental, then pay the same rental each month until you return the car. Jaecoo’s current E5 offer is a typical structure: an initial rental of £2,070.72, which is six times the monthly payment, followed by 35 monthly rentals of £345.12, over 36 months at 10,000 miles a year, with VAT included. The finance company, Arval, owns the car throughout, and Jaecoo’s terms state plainly that you will not own it at the end of the agreement.

What the rental covers matters as much as its size. Which? says tax costs are typically paid by the leasing company on personal contract hire, so road tax is normally in the price. Insurance and charging are yours to pay. At the end you are charged for any miles over the total in the agreement and for repairs beyond normal wear and tear, which the leasing industry body, the BVRLA, defines as deterioration from normal use rather than damage from a specific event.

A larger initial rental lowers the monthly figure without lowering the total, so the headline monthly price on its own tells you little. The fair comparison is the initial rental plus every monthly rental plus any fees, divided by the number of months.

PCH, PCP, business leasing and salary sacrifice: what is the difference?

The difference between the routes is who owns the car, whether you can keep it, and how it is taxed.

Route	Who owns the car	Upfront payment	At the end	Tax position	Suits
Personal contract hire (PCH)	Leasing company	Initial rental, often a multiple of the monthly	Hand it back; no option to buy	Rentals include VAT; road tax typically included	Private drivers who want a fixed cost and no resale risk
Personal contract purchase (PCP)	Finance company until the final payment	Deposit	Hand back, part exchange, or pay the balloon to keep it	Interest charged; you choose whether to buy	Drivers who may want to keep the car
Hire purchase (HP)	Finance company until the last payment	Deposit, usually higher	You own the car	Interest charged	Buyers who keep cars for many years
Business contract hire (BCH)	Leasing company	Initial rental	Hand it back	Most businesses cannot recover 50% of the VAT on rentals	Sole traders and companies
Salary sacrifice	Leasing company, through your employer	Set by the scheme	Hand it back	Paid from gross pay; benefit in kind tax on 4% of list price in 2026 to 2027	Employees whose employer runs a scheme

PCP is the one most often confused with leasing. BYD’s representative example for the Seal Design, a £45,730 car, asks for a £4,999 deposit, adds a £1,881 deposit contribution, then £439 a month at 1.9% APR with 6,000 miles a year. At the end you can pay an optional final payment of £17,457.38 to keep the car; BYD’s total amount payable, which includes its £1,881 contribution, is £45,409.37. If you hand it back instead, you have paid £26,070.99 for four years of use. Our comparison of leasing, PCP and buying an EV works through when each comes out ahead.

Business contract hire works like PCH but is taken out by a business. HMRC’s VAT manual says most companies leasing a car for business purposes cannot recover 50% of the VAT charged, because that half stands in for private use. Personal offers are not always open to businesses: Jaecoo’s E5 deal states it is not available to business users.

How does salary sacrifice change the cost?

Salary sacrifice is usually better value than a personal lease if your employer offers it, because the rental comes out of your pay before income tax and National Insurance. HMRC defines salary sacrifice as giving up cash pay in return for a non-cash benefit, and its manual confirms that the optional remuneration rules, which would otherwise tax the salary given up, do not apply to cars emitting 75g/km of CO2 or less. Electric cars are therefore taxed only on their benefit in kind.

The benefit in kind rate for electric cars is 4% of list price in the 2026 to 2027 tax year, rising to 5% in 2027 to 2028 under the one percentage point annual rises HMRC announced in November 2022. On a Jaecoo E5 Pure at £27,505, the taxable benefit is £1,100.20 a year. A basic rate taxpayer pays £220.04 a year on that, about £18.34 a month; a higher rate taxpayer pays £440.08, about £36.67 a month.

The saving on the rental itself comes from the tax and National Insurance you no longer pay on the salary given up. Using 2026 to 2027 rates in England, a basic rate taxpayer saves 20% income tax and 8% National Insurance, so every £100 of gross salary sacrificed reduces take-home pay by £72. A higher rate taxpayer saves 40% and 2%, so £100 sacrificed costs £58. Gov.uk adds one limit: the sacrifice must not take your cash pay below the National Minimum Wage. Our page on salary sacrifice vs a personal lease compares the two routes side by side.

Read the exit terms before you sign, because a salary sacrifice car is tied to your job. Our guide to what happens if you leave your job covers early termination.

Worked UK example: what does a Jaecoo E5 lease really cost?

The Jaecoo E5 Pure on Jaecoo’s November 2026 PCH offer costs £14,149.92 over three years, or 47.2p a mile on its 30,000-mile allowance, before you charge it.

EV Compared’s charging figures use the method on our methodology page: efficiency is WLTP miles divided by usable battery, priced at 6.5p/kWh for Intelligent Octopus Go, 26.32p/kWh at the October to December 2026 price cap, and 82p/kWh on public rapid chargers, with charging losses ignored. The E5 has a 58.9 kWh usable battery and a 248-mile WLTP range, which gives 4.2 miles per kWh, so 30,000 miles needs 7,125 kWh.

Cost over 36 months, 30,000 miles	E5 Pure	E5 Luxury
Initial rental	£2,070.72	£2,253.60
35 monthly rentals	£12,079.20	£13,146.00
Total lease cost	£14,149.92	£15,399.60
Real monthly cost	£393.05	£427.77
Lease cost per mile	47.2p	51.3p
Home charging at 6.5p/kWh	£463.13	£463.13
Lease plus home charging, per mile	48.7p	52.9p

Where you charge changes the total more than the trim does. At the price cap rate, the same 30,000 miles costs £1,875.30 to charge, and on public rapid chargers alone it costs £5,842.50, or 19.5p a mile against 1.5p a mile on the off-peak tariff. Charged entirely on rapids, the E5 Pure lease rises to 66.6p a mile. A home charger and a smart charging tariff are worth arranging before the car arrives; Best Chargers compares home chargers and installation.

Set against the car’s £27,505 list price, the Pure lease total is 51.4% of the price for three years of use, with no resale value at risk. That is the figure to hold other quotes against.

What does a good electric car lease deal look like?

A good deal has a low total cost per month of use, an allowance that matches your driving, and clear end-of-term terms. Work out three numbers for every quote: the total cost (initial rental plus all monthly rentals plus fees), that total divided by the months in the term, and that total divided by the miles allowed. The Jaecoo E5 Pure sets a benchmark of £393.05 a month and 47.2p a mile for a 248-mile family SUV in November 2026.

Check that the quote is like for like. Jaecoo’s offer is at 10,000 miles a year and BYD’s PCP at 6,000, so the lower looking monthly figure may simply carry fewer miles. Check whether metallic paint is included, since Jaecoo’s offer excludes it, and whether the delivery date falls inside the offer window: Jaecoo’s needs an order by 31 December 2026 and delivery by 31 March 2027. Chinese brands are a growing part of the UK lease market, as our report on Chinese brands driving UK leasing demand shows, so include at least one in your shortlist of quotes.

What are the common mistakes when leasing an electric car?

The most common mistake is comparing monthly prices instead of total cost. On the E5 Pure, the headline £345.12 understates the real monthly cost by £47.93, because a six-month initial rental is paid upfront.

The second is setting the mileage too low to win a lower rental. Which? says each extra mile typically costs around 10p, so driving 3,000 miles a year over the allowance on a three-year lease adds about £900, enough to wipe out the saving.

The third is ignoring the return condition. The BVRLA’s fair wear and tear standard separates normal wear from damage, and Jaecoo’s terms charge for repairs beyond normal wear and tear. Inspect the car against your leasing company’s return standard a few weeks before collection, and get any damage repaired yourself if that costs less than the charge.

The fourth is assuming public charging costs the same as home charging. On the E5, rapid charging costs 12.6 times as much per mile as the off-peak home rate, which turns a 48.7p a mile lease into one at 66.6p.

Is leasing an electric car right for you, and what should you do next?

Leasing is the right choice if you want a new EV for three years at a known cost and your employer does not run a salary sacrifice scheme; salary sacrifice is the better choice if it does. Buying, or a PCP you intend to complete, suits drivers who keep cars long after the warranty and cover high mileage.

Start by asking your employer whether it offers salary sacrifice. If not, gather three PCH quotes at your real annual mileage and work out the total cost, the real monthly cost and the cost per mile for each. If a new car is beyond your budget, used EV personal leasing is a growing alternative. Our verdict, based on published offers rather than a test drive: judge every lease on its total, and treat any headline monthly price as half the story.