What Is the Benefit in Kind Rate for Electric Cars?

The Benefit in Kind rate for a fully electric company car is 4% for the 2026/27 tax year (6 April 2026 to 5 April 2027). That figure is set by HMRC and applies to every zero-emission battery electric vehicle registered in the UK, regardless of list price or range. The rate rises year by year, reaching 9% by 2029/30 on a schedule that has been confirmed in legislation. Even at 9%, electric cars sit far below petrol and diesel company cars, which attract rates of roughly 17 to 37% in 2026/27 under GOV.UK Appendix 2 (figures vary, verify current data). This guide explains the full schedule, how the tax is calculated, what it costs in practice, and how salary sacrifice changes the picture.

Electric car BiK rates: the full schedule to 2030

The table below shows the confirmed appropriate percentage for zero-emission electric cars from 2024/25 to 2029/30. All figures are sourced from GOV.UK 480 Appendix 2 and the GOV.UK Income Tax: Company car tax rates 2028 to 2030 publication (figures vary, verify current data).

Tax year	BiK rate (zero-emission EV)
2024/25	2%
2025/26	3%
2026/27	4%
2027/28	5%
2028/29	7%
2029/30	9%

The rate increases by 1 percentage point each year from 2025/26 to 2027/28, then by 2 percentage points a year in 2028/29 and 2029/30. The 9% figure for 2029/30 is the confirmed cap under current policy, as set out in the GOV.UK company car tax rates 2028 to 2030 paper. The schedule to 2029/30 was left unchanged when the confirmed rates were legislated, and HMRC has stated the aim is to keep incentivising EV uptake while beginning to equalise rates with other vehicles over the longer term.

The key point for anyone ordering a car now is that the acceleration in the final two years is steeper than the earlier rises. A driver who takes delivery in 2026 and keeps the car for four years will see their BiK rate double from 4% to 9% across the lease term.

How is BiK tax calculated?

The formula for calculating your annual Benefit in Kind tax is:

P11D value x appropriate percentage x your income tax rate = annual BiK tax

Here is what each element means:

1. P11D value: The car’s list price including VAT and any factory-fitted options, but excluding the first registration fee and annual road tax. This is the manufacturer’s recommended retail price at the date of first registration, not what you or your employer actually paid.
2. Appropriate percentage: The BiK rate for your vehicle’s CO2 band. For zero-emission electric cars, that is 4% in 2026/27.
3. Income tax rate: Your marginal rate, either 20% (basic rate) or 40% (higher rate) for most employees. Scottish rates differ.

Divide the annual figure by 12 to get your monthly BiK tax cost.

Your employer deducts the tax through PAYE by adjusting your tax code, so you do not receive a separate bill.

Worked examples for 2026/27

The following examples use illustrative P11D figures to show what BiK tax looks like in practice. No specific car’s list price is presented as fact.

Example 1: EV with a P11D of £35,000, basic-rate taxpayer

Step	Calculation	Amount
P11D value	£35,000 (illustrative)
Appropriate percentage	4%
Taxable benefit	£35,000 x 4%	£1,400
Income tax at 20%	£1,400 x 20%	£280 per year
Monthly BiK cost	£280 / 12	£23 per month

Example 2: EV with a P11D of £55,000, higher-rate taxpayer

Step	Calculation	Amount
P11D value	£55,000 (illustrative)
Appropriate percentage	4%
Taxable benefit	£55,000 x 4%	£2,200
Income tax at 40%	£2,200 x 40%	£880 per year
Monthly BiK cost	£880 / 12	£73 per month

Multi-year projection: how the rising rate affects a £55,000 EV for a 40% taxpayer

This table shows how the same illustrative car at £55,000 P11D value changes year by year as the rate rises:

Tax year	BiK rate	Taxable benefit	Annual BiK tax (40%)	Monthly cost
2026/27	4%	£2,200	£880	£73
2027/28	5%	£2,750	£1,100	£92
2028/29	7%	£3,850	£1,540	£128
2029/30	9%	£4,950	£1,980	£165

The monthly cost roughly doubles from 2026/27 to 2029/30 for this example. That is still a small number in the context of a whole-life vehicle cost, but it is worth factoring into any decision about lease length. A driver who finishes a three-year lease by April 2029 avoids the steepest two-year increase entirely.

You can use our company car tax calculator to work out your own figures across the lease term.

How does an electric car compare with petrol and diesel?

The BiK advantage for electric cars is substantial. Petrol and diesel cars are rated on a CO2 emissions scale, and most conventional models attract rates well above an EV’s 4%.

Vehicle type	Typical CO2	2026/27 BiK rate	2029/30 BiK rate
Zero-emission EV	0 g/km	4%	9%
Petrol/diesel (medium CO2, approx 51-75 g/km)	51-75 g/km	approx 17%	approx 19% (figures vary, verify current data)
Petrol/diesel (higher CO2, 151g/km+)	151+ g/km	approx 34-37%	up to 39% cap (figures vary, verify current data)

Source: GOV.UK 480 Appendix 2 and GOV.UK company car tax rates 2028 to 2030.

To put this in monetary terms: on a £55,000 car, a higher-rate taxpayer pays around £73 per month in BiK tax for the EV in 2026/27. An equivalent petrol car at a typical 31% rate would generate a taxable benefit of £17,050, producing an annual BiK tax bill of £6,820 and a monthly cost of roughly £568. The difference is approximately £495 per month in favour of the EV.

The petrol and diesel rates given here are directional. Verify the exact appropriate percentage for a specific vehicle against the full Appendix 2 table before relying on them for a decision.

If you are weighing up a fully electric company car against a conventional one, our full guide to company car tax calculator walks through the wider running-cost picture.

How does salary sacrifice change the picture?

A salary sacrifice arrangement works differently from a standard company car provision, but the BiK rules still apply in the same way. When your employer provides an EV through salary sacrifice, you agree to reduce your gross salary by an amount that covers the cost of the car. HMRC still treats the vehicle as a benefit in kind, so you pay BiK tax on it at the same 4% rate.

The additional saving under salary sacrifice comes from the salary you give up. Because that portion of your pay is never subject to income tax or National Insurance, you avoid those charges on the sacrificed amount. The net result is that your income tax and NI saving on the forgone salary typically more than offsets the BiK charge, which at 4% is low enough to leave most of the salary-sacrifice benefit intact.

The size of the saving depends on your income tax rate, your NI rate, and the cost of the car. Salary sacrifice tends to be more attractive the higher your marginal tax rate and the more expensive the car. The mechanism works because BiK tax at 4% is small compared with the income tax and NI you avoid on the salary sacrificed.

What about plug-in hybrids?

Plug-in hybrids (PHEVs) are taxed very differently from fully electric cars and sit on a scale based on both CO2 emissions and zero-emission electric range. Their rates are considerably higher than the 4% that applies to zero-emission vehicles, and they vary by model.

There is a temporary easement for PHEVs registered between 1 January 2025 and 5 April 2028. Under this easement, eligible PHEVs can be valued for BiK purposes on a CO2 figure of 1 g/km rather than their actual CO2 output, provided the vehicle meets the qualifying conditions set out by HMRC. This reduces the BiK rate significantly for affected models. The easement ends on 5 April 2028, after which standard CO2-based rates apply.

If you are considering a PHEV, check the current rate for the specific model against the GOV.UK PHEV benefits-in-kind easement guidance, and note that the easement end date is fixed.

For anyone comparing a PHEV with a zero-emission EV purely on BiK, the EV wins at 4% against any PHEV rate, including those benefiting from the temporary easement.

What should you do next?

The BiK rate for electric cars is low, the schedule is confirmed, and the calculation is straightforward once you know your P11D value and tax rate. Here is a simple checklist before making a decision:

• Find the car’s P11D value. Ask your employer or the supplying dealer for the confirmed figure including VAT and all factory options, minus the first registration fee and road tax.
• Confirm your income tax band. Check your current tax code or recent payslip. Scottish taxpayers should use their devolved rates.
• Model the cost across the full lease term. Use the rate schedule above to project what you will pay in 2026/27, 2027/28, and beyond, and consider whether the contract end date falls before or after the steeper rises in 2028/29 and 2029/30.
• Speak to your employer’s fleet or salary sacrifice provider. They can give you the net monthly cost including any employer contribution, insurance, maintenance, and charging provision.

Taking a few minutes to run the numbers year by year avoids surprises as the rate rises.

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