NHS staff have three main routes to car ownership: direct purchase with NHS discounts, salary sacrifice schemes, or personal leasing. Each option has distinct advantages depending on your circumstances, career plans, and financial priorities.
NHS staff have three main routes to car ownership: direct purchase with NHS discounts, salary sacrifice schemes, or personal leasing. Each option has distinct advantages depending on your circumstances, career plans, and financial priorities.
Understanding the real costs and benefits of each approach helps you make an informed decision that aligns with your situation, whether you're a junior doctor rotating between trusts, a consultant planning long-term, or a nurse protecting your pension.
"There's no one-size-fits-all answer. The right choice depends on your tax bracket, how long you'll stay in your role, and whether you prioritise ownership or convenience. Each option serves different needs." – Steve Thornton, Managing Director, Motor Source
Here's what you need to know: salary sacrifice offers tax efficiency and bundled convenience; personal leasing provides flexibility without employer tie-ins; direct purchase through Motor Source delivers ownership with average £7,500 NHS discounts and complete finance freedom: PCP, HP, or your own bank.
Let's break down what each option offers and who it suits best.
How it works: You buy a new car using Motor Source's NHS discount (average £7,500), financing through PCP, HP, or your own bank loan. The vehicle is yours from day one.
Key advantages:
Considerations:
How it works: Your employer arranges a lease, deducting payments from your gross salary before tax. This reduces your taxable income, creating tax and NI savings. The package typically includes insurance, servicing, maintenance, tyres, and breakdown cover.
Key advantages:
Considerations:
How it works: You lease a vehicle directly from a leasing company with fixed monthly payments from your post-tax income. At the end of the term, you return the car.
Key advantages:
Considerations:
Here's how the costs compare over different timeframes.
| Option | Total Cost | Your Asset | Best For |
|---|---|---|---|
| Salary Sacrifice (40% taxpayer) | £10,600 | £0 | Higher earners wanting convenience |
| Personal Lease | £14,800 | £0 | Those prioritising job flexibility |
| Motor Source NHS Discount Purchase | £17,500* | £15,000 | Building long-term equity |
*Includes: Purchase + insurance + servicing + tyres
3-Year Insight: Salary sacrifice offers the lowest out-of-pocket cost for higher-rate taxpayers over 3 years. Personal leasing provides moderate costs with job flexibility. Direct purchase costs more initially but leaves you with a £15,000 asset—valuable if you're keeping the vehicle longer.
| Option | 10-Year Cost | Asset Value |
|---|---|---|
| Salary Sacrifice (3 cycles) | £31,800 | £0 |
| Personal Lease (3 cycles) | £44,400 | £0 |
| Motor Source Purchase (5 years payments, 5 years free) | £23,500 | £8,000+ |
10-Year Insight: Long-term ownership significantly reduces total cost of motoring. After your finance is paid off (typically 5 years), you drive free while leasing continues indefinitely.
For NHS staff on defined benefit pensions, salary sacrifice has an important consideration: it reduces your pensionable income.
Example: Band 6 nurse, £35,000 salary, £370/month sacrifice.
When this matters: If you're early in your career with decades until retirement, the compounding effect is significant. If you're closer to retirement or already have substantial pension savings, the impact is less concerning.
Alternative: Direct purchase with NHS discount maintains full pensionable income while still providing significant savings through the discount itself.
"The pension impact is real, but it's one factor among many. For a consultant earning £100,000+ who's already maxed pension contributions, salary sacrifice can still make sense. For a younger nurse building long-term security, ownership might serve better." – Steve Thornton, Managing Director, Motor Source
Unlike schemes that restrict your finance choices, Motor Source offers complete flexibility while applying the NHS discount.
"We don't restrict your finance. Bring your bank loan, choose PCP, use HP—whatever suits you. We apply the NHS discount regardless. That's genuine flexibility." – Steve Thornton, Managing Director, Motor Source
Motor Source provides fleet pricing typically reserved for corporations. Here are actual examples:
| Vehicle | UK RRP | You Save | Price |
|---|---|---|---|
| Toyota C-HR Hatchback 1.8 Hybrid Icon 5dr CVT | £31,645.00 | £5,729.77 | £25,915.23 |
| Kia EV6 | £45,585 | £7,719 | £37,866 |
| VW Tiguan R-Line | £43,325 | £7,294 | £36,031 |
| Average Saving | £6,900+ |
These discounts apply whether you choose PCP, HP, or your own bank finance.
Your situation: Rotating between trusts every 6-12 months.
Recommended: Personal lease or nearly-new purchase (£15k-£20k) with flexible finance. Salary sacrifice carries high termination risk given frequent trust changes.
Why: Job mobility is essential during training. Personal ownership or leasing without employer tie-ins protects you from termination fees.
Your situation: Stable position, higher income (40%+ tax bracket).
Short-term preference (3-4 years): Salary sacrifice offers strong tax efficiency if you want new cars regularly and job stability is certain.
Long-term preference (5+ years): Motor Source NHS discount with HP builds equity. After 5 years, you own outright and drive free.
Middle ground: Motor Source PCP gives you new car flexibility every 3 years while building equity—best of both worlds.
Your situation: 20% tax bracket, valuable NHS pension to protect.
Recommended: Motor Source NHS discount with HP. Maintains full pensionable income while building ownership.
Why: At 20% tax, salary sacrifice saves 32%—helpful but not dramatic enough to justify pension reduction over a 30-year career.
Your situation: Lower-to-moderate income, long-term stable employment.
Recommended: Nearly-new purchase (£12k-£18k) with Motor Source NHS discount or bank finance.
Why: Builds assets without overextending budget. Salary sacrifice may be limited by National Minimum Wage requirements at lower salaries.
Annual mileage significantly impacts which option makes sense:
| Annual Mileage | Salary Sacrifice / Lease | Motor Source Purchase |
|---|---|---|
| 10,000 miles | Typically included | Unlimited |
| 15,000 miles | +£500-£750/year excess | Unlimited |
| 20,000 miles | +£1,000-£1,500/year excess | Unlimited |
If you drive over 12,000 miles annually: Ownership becomes significantly more cost-effective. Excess mileage charges add up quickly over a 3-year lease term.
Salary sacrifice providers advertise tax savings percentages. These are real—but remember the calculation is on the gross amount, and lease prices may be higher than equivalent personal leases to account for the tax benefit. Always compare the actual net monthly cost, not just the percentage saved.
Underestimating annual mileage is common. Factor in commuting, weekend trips, family visits, and holidays. If you estimate 10,000 but drive 14,000, excess charges add £400-£600 annually—£1,200-£1,800 over 3 years.
When comparing options, include everything: monthly payments, insurance, servicing, tyres, deposits, and potential excess mileage. Only then can you compare accurately.
Motor Source specialises in helping NHS staff navigate these decisions with transparency and flexibility.
What we offer:
"We don't push one solution. We show you the numbers for salary sacrifice, personal leasing, and ownership, then help you choose what's right for your situation. Sometimes salary sacrifice is best. Sometimes it's not. You decide." – Steve Thornton, Managing Director, Motor Source
Disclaimer: All prices, costs, and savings figures mentioned in this article are estimates for illustrative purposes only and are based on new vehicles available through Motor Source. Actual costs may vary depending on the specific vehicle, finance terms, insurance provider, maintenance requirements, and individual circumstances. The figures shown represent typical scenarios but should not be considered guaranteed amounts. NHS discount percentages and values are subject to change and may vary by vehicle model and manufacturer. For accurate, personalised quotes based on your specific requirements, please contact Motor Source directly on 01522 500 055.
Salary sacrifice and leasing costs are estimated based on typical schemes available to NHS staff as of February 2026. Motor Source purchase costs include estimated running expenses over the comparison period. Individual results will vary. Pension impact calculations are illustrative based on current NHS pension scheme rules.
Whether you choose salary sacrifice, personal leasing, or our exclusive NHS discounts, Motor Source is here to help you get the best deal. Our expert team will guide you through all options to find what works best for your situation.
