Electric Car BIK UK 2026/27 | EV Company Car Tax Rates

Pure electric company cars pay the lowest Benefit-in-Kind rate available: 4% of the P11D value for 2026/27, up from 3% in 2025/26 and set to rise to 5% in 2027/28. A £50,000 EV therefore produces a £2,000 taxable benefit, costing a higher-rate taxpayer £800 a year — against £6,200 for an illustrative £50,000 petrol car at 31% BIK. The comparison is tax-focused; the overall choice also depends on the employer package and vehicle costs.

The rate is confirmed for 2026/27, so the planning question is not whether an EV company car is tax-efficient but how to get one most cheaply — through salary sacrifice, with charging costs, and before the rate climbs again. Calculate your exact figure with the Company Car BIK Calculator→, and compare the cash-allowance alternative with the Salary Calculator→.

EV BIK Rates by Year

The 2% rate applied in earlier years; it rose to 3% in 2025/26, 4% in 2026/27, and the government has confirmed 5% from 2027/28. Even at 5%, the tax can remain below petrol and diesel, but the comparison should use the actual car, package and tax position. There is no employee Class 1 NI on the company-car benefit itself.

How Much Tax You Pay

The calculation is the same as any company car: taxable benefit = P11D value × BIK percentage, then tax at your marginal rate. A Tesla Model 3 at £50,000 P11D: £50,000 × 4% = £2,000 benefit, costing £400 a year at 20%, £800 at 40% and £900 at 45%. A Volkswagen ID.4 at £45,000 costs £720 a year at 40%. Compare a petrol car on the same £50,000: at 31% BIK the benefit is £15,500 and the 40% tax is £6,200 — over seven times the EV figure.

Salary Sacrifice Makes It Cheaper Still

Some employers offer EV salary sacrifice. You give up gross salary for the lease, which may save Income Tax and employee NI on the sacrificed amount, while the employer may save secondary NI; whether any saving is shared depends on the scheme. For a higher-rate taxpayer sacrificing £500 a month, the illustrative tax and NI saving is about £2,520 a year, so the £6,000 lease would be £3,480 before the BIK charge, plus roughly £67 a month of BIK tax for a £50,000 EV. The Optional Remuneration Arrangement rules do not apply to cars with approved CO₂ emissions of 75 g/km or less, which includes pure EVs and some PHEVs; this is a legal threshold, not simply a consequence of the BIK percentage.

Charging and the Fuel Benefit Absence

There is no separate car fuel benefit charge for electricity used to charge a company EV: the £29,200 multiplier for petrol and diesel private fuel does not apply. HMRC guidance also covers employer-provided charging at work and reimbursement of electricity for charging the company car at home. A home charging point paid for by the employer is generally exempt, but solar panels or a home battery can have separate tax treatment. Reimbursement for business miles follows the applicable mileage rules and employer policy.

Plug-in Hybrids and the Range Trap

Plug-in hybrids (1–50 g/km) pay BIK based on electric range: 130+ miles at 4%, 70–129 miles at 7%, 40–69 miles at 10%, 30–39 miles at 14%, and under 30 miles at 16% for 2026/27. A short-range hybrid therefore pays four times the EV rate, and the percentage applies regardless of how you actually drive — a car with a 25-mile range that is rarely charged still sits at 16%. The trap is that many hybrids' real-world range falls far below the advertised figure, so buyers who expected a low rate face a benefit worth thousands more than planned. If tax efficiency is the priority, a pure EV at 4% remains the lowest-rate choice.

Insurance, VED and Running Costs

The company car package may include insurance, maintenance and breakdown cover; check the employer policy. EVs are no longer generally exempt from Vehicle Excise Duty: from 1 April 2026 a zero-emission car registered on or after 1 April 2025 pays £10 in its first year and the standard £200 rate thereafter, subject to possible expensive-car supplement rules. Registration dates before that have different rates. Electricity and servicing costs vary by vehicle, tariff and usage, and should be modelled rather than assumed.

Common EV BIK Mistakes

The recurring errors are quoting the 2025/26 3% rate as the 2026/27 rate (now 4%), forgetting that optional extras can raise the relevant value, assuming the 4% rate applies to plug-in hybrids with short electric range, and overlooking the rise to 5% when comparing multi-year lease costs. Drivers also miss that a cash allowance alternative may carry employee NI while the company-car benefit does not. Check the P11D figure and the approved CO₂/electric-range data before ordering, and recalculate the benefit every April when rates change.

The P11D Check

The P11D value is the list price including VAT, delivery and most options, less any capital contribution up to £5,000. Two practical points for EVs: battery-leasing and charging accessories can inflate the value, and the 4% rate applies to the adjusted value after your capital contribution. Because the percentage is small, a £2,000 option adds £80 of benefit — modest, but worth knowing when your employer configures the car. Confirm the P11D figure on your form P11D each year; a misquoted value is the most common cause of an incorrect BIK bill.

The annual figure is then adjusted for availability. If the car is available for only part of the tax year, the cash equivalent is normally apportioned by the number of days it was available, not simply by the number of journeys made. Private use includes ordinary commuting and use by family members. A car kept at home but unavailable under a genuine period of employer-imposed restriction may need a separate review, so record handover, return and replacement dates.

Employee payments can reduce the taxable benefit where they are payments for private use of the car, but the treatment depends on what the payment is for and when it is made. A contribution towards the cost of the car is not the same as paying for private fuel or charging. Ask payroll how each payment is coded and keep the agreement, payslips and annual P11D together. Do not assume that a payroll deduction automatically reduces the BIK calculation.

Salary Sacrifice and Employer Risk Checks

Salary sacrifice changes the employee's contractual gross pay, so compare the sacrificed salary with the BIK tax, pensionable pay, statutory-pay consequences, student-loan calculations and any employer fee. The 4% company-car percentage does not turn every lease charge into a tax saving. The employer must also check whether the vehicle falls within the optional-remuneration rules, whether the arrangement is a genuine contract variation and whether the employee can still afford the deductions if the car is returned.

For a pure EV or a car within the relevant low-emission threshold, the special company-car treatment can make salary sacrifice more attractive than for high-emission cars. That is not a blanket exemption from every benefit rule: accessories, home solar panels or batteries, private-use reimbursements, insurance, early termination and cash alternatives can have separate consequences. The employer should model the full package and communicate the tax year used for the quote.

Charging: Keep the Vehicle and Electricity Facts Separate

HMRC's electric-car guidance distinguishes a company car from an employee's own car. Electricity supplied at work for a company EV, a qualifying home charger installed for the company car and a qualifying reimbursement of electricity used to charge the company car can be exempt from an additional benefit charge. Employer-funded solar panels or a home battery are different: HMRC treats those as a taxable benefit because they are not necessary for providing or running the car. Reimbursement of a privately owned car can also be earnings or mileage relief rather than company-car treatment.

For business journeys, agree whether the employer uses the Advisory Electricity Rate or another permitted mileage method, and retain mileage records. A flat payment that is not tied to the company car can be taxable. The tax-free result therefore depends on the car owner, charging point, journey purpose, reimbursement method and evidence — not simply on the word “electric”.

EV BIK and Company Car Policy

Employers often design EV policies around the tax numbers: the 4% BIK percentage can keep the benefit lower than for many petrol and diesel cars, while the employer still has Class 1A obligations and scheme costs. Some employers restrict salary-sacrifice options because OpRA changes the treatment of cars above 75 g/km. From the driver's side, the 4% rate applies to the relevant EV value whether the car costs £40,000 or £60,000, subject to adjustments and the employer policy.

Frequently Asked Questions

Run the numbers with the Company Car BIK Calculator→ and the Salary Calculator→. Pair this guide with Company Car BIK 2026/27→ and EV vs Petrol Ownership Cost 2026/27 for the complete electric-car picture.

Official sources

• GOV.UK: Company car benefit appropriate percentages
• GOV.UK: Tax on company cars
• HMRC Employment Income Manual: Electric company car charging
• GOV.UK: Vehicle tax for electric, zero and low-emission vehicles
• GOV.UK: Optional remuneration arrangements
• GOV.UK: Travel, mileage and fuel rates