Most employees know commuting costs money. What most don’t realise is quite how much. When you add up fuel, depreciation, insurance, parking, train fares, and bus passes, the real cost of commuting for UK employees in 2026 is a figure that tends to come as a genuine shock.

And with commuting expenses rising, the squeeze is only getting tighter.

The good news is that, these days, employers can actually do something meaningful about it. Treating salary sacrifice as a commuting cost solution is one of the best ways to cut commuting costs for employees, and it benefits the business too.

The real cost of commuting for UK employees in 2026

Let’s start with the numbers, because they’re worth sitting with for a moment.

If you drive to work

Research by the RAC and AA has shown that the actual cost of car ownership in the UK, once you factor in fuel, insurance, road tax, servicing, tyres and depreciation, is between £3,400 and £5,000 per year for a typical driver.

Most people wildly underestimate this because they’re only thinking about fuel and insurance, not the invisible stuff, particularly depreciation.

Depreciation is one of motoring’s big hidden costs.

According to the AA, the average new car will have lost around 60% of its value after three years, roughly 20% per year. For many drivers, depreciation adds more to the cost-per-mile than fuel does. It slips by unnoticed until the moment you come to sell.

If you use public transport

Train commuters haven’t had it much easier. Fares rose 4.6% in March 2026, adding around £223 to the average annual cost for a regular train user. Bus fares are up around 8% on average, and parking charges in major UK cities increased by 11% last year.

Stats published by Ipsos in 2025 found that 45% of Britons reported an increase in their monthly travel spend, and nearly four in ten of those people said they were struggling to afford the extra.

The bottom line

Put it all together, and the picture feels pretty stark.

Commuting costs the average UK employee between £2,600 and £5,100 every year, with most workers underestimating their true spend by at least 30%. In some cities the maths is even more eye-watering: London train commuters can spend up to 22% of their monthly earnings just getting to and from the office, while Birmingham car commuters can see up to 16% of salary eaten up before they’ve paid a single household bill.

Can my employer help with commuting costs?

This is a question more employees are starting to ask and one that HR teams and reward managers should be ready to answer properly.

HMRC does not allow tax relief on the standard home-to-work commute, which is treated as personal expenditure regardless of the distance involved. So no, you can’t simply reimburse an employee’s fuel costs or season ticket and call it a day.

But here’s what you can do: offer a salary sacrifice car scheme. Done right, it’s one of the most tax-efficient ways an employer can meaningfully reduce the cost of getting staff to work every day.

Ready to help your employees cut their commuting costs?

Talk to SG Fleet about salary sacrifice as a commuting cost solution for your employees. It costs nothing to get started, and the savings for your team can be significant. Get in touch with our team today.

How salary sacrifice reduces commuting costs for employees

A salary sacrifice scheme works by deducting the cost of a car lease from an employee’s gross salary before income tax and National Insurance are calculated. That pre-tax deduction is the bit that does the heavy lifting.

The tax savings stack up fast

For a 20% taxpayer, a car with a notional monthly cost of £500 could have a real-terms cost closer to £365 per month once the tax and NI savings are factored in. For a 40% taxpayer, that figure drops even further.

The employee gets access to a brand-new, fully insured, maintained vehicle at a cost that is consistently lower than going to a private leasing company or running a personal car.

Crucially, salary sacrifice schemes with SG Fleet bundle everything into one fixed monthly payment, including insurance, servicing, and breakdown cover.

The unpredictable costs of personal car ownership are replaced with one clear monthly number.

EVs make the numbers even better

Electric vehicles on salary sacrifice carry a Benefit in Kind (BiK) rate of just 3%, compared to rates of up to 37% for higher-emission petrol cars. For employees who commute in an EV, the combination of low BiK tax and drastically cheaper running costs makes a substantial difference to the monthly outgoings. EVs also have lower servicing costs given fewer moving parts, which feeds directly into the overall package cost.

At SG Fleet, both our Novalease and Salarylease schemes allow employees to choose from any new or used car on the UK market, including electric and hybrid models. We’re the UK’s only provider offering both personal and business lease-based salary sacrifice, so whatever your requirements, we have a structure that fits.

Start reducing your employees’ commuting costs today

Commuting costs are a real, felt problem for your employees, and one that a well-structured salary sacrifice scheme can do something genuinely useful about. If you’re an HR or reward manager looking to add substance to your benefits offering, or exploring ways to cut National Insurance while improving retention, we’d love to talk it through.

We’ve been helping UK businesses of all sizes get the most from salary sacrifice for over 25 years. Get in touch with the SG Fleet team, and we’ll walk you through exactly what a scheme could look like for your organisation.

FAQs

How does salary sacrifice reduce commuting costs for employees?

Salary sacrifice reduces commuting costs by allowing employees to lease a car through their employer and pay for it using pre-tax salary. Because the deduction happens before income tax and National Insurance are calculated, employees pay less tax overall.

What is the real cost of commuting for UK employees in 2026?

The real cost of commuting for UK employees in 2026 ranges from approximately £2,600 to £5,100 per year, depending on mode of transport, distance, and location. Car drivers face additional costs from depreciation, often the single largest element of motoring costs.

Can my employer help with my commuting costs in the UK?

Yes, through a salary sacrifice car scheme. HMRC does not allow tax relief on standard home-to-work commuting, but employers can offer a salary sacrifice arrangement where employees lease a vehicle using pre-tax income.

Is salary sacrifice available for used or electric cars?

Yes. At SG Fleet, both our Novalease and Salarylease schemes give employees access to any new or used car on the UK market, including electric and hybrid models. Used EVs on salary sacrifice are increasingly popular as they offer lower monthly costs.