EV & PHEV BIK rates 2026 - 2031: what the Budget means for salary sacrifice

Electric and plug-in hybrid company-car tax rate, the key changes from 2026 to 2031, and an interactive calculator to see what it could mean for you.

Electric Car BIK Calculator Updated for Budget 2026

Understand your company car tax. Plan ahead. Drive electric for less. Updated for Budget 2026

See exactly what Benefit-in-Kind (BIK) tax could cost on a fully electric or plug-in hybrid company car. With the latest UK Budget 2026 announcements confirming future BIK rates, understanding how your tax could change throughout a vehicle lease has never been more important. Our free calculator allows you to estimate your monthly BIK tax, compare future tax years and understand the impact on your electric vehicle costs.

Enter your vehicle's P11D value, select your vehicle type and Income Tax rate, and instantly see your estimated monthly and annual Benefit-in-Kind tax. The calculator also displays the published future BIK rates, allowing you to see how your tax could change throughout a typical 36 or 48-month lease.

Future Electric Car BIK Rates: 2026 to 2031

Benefit-in-Kind tax is payable when an employee receives a company car that is available for personal use, including commuting. The amount of tax payable depends on the vehicle's P11D value, its applicable BIK percentage and the employee's Income Tax circumstances.

Fully electric vehicles continue to benefit from significantly lower BIK percentages than most petrol and diesel alternatives, making them an attractive option for company car drivers and salary sacrifice schemes.

However, BIK rates are increasing over the coming years.

Fully Electric Vehicle BIK Rates

Tax year BIK Rate

2026/27 4%

2027/28 5%

2028/29 7%

2029/30 9%

2030/31 10%

What's new following Budget 2026?

On 28 October 2026, the UK Government announced that the BIK rate for fully electric company cars will increase from 9% to 10% from April 2030.

This provides additional certainty for employees and employers entering longer-term vehicle leasing agreements.

The 2030/31 rate is announced policy, subject to legislation. Rates beyond this period have not yet been confirmed.

Important Changes from April 2028

From April 2028, the standard BIK rate for PHEVs emitting 1-50g/km will become 18%, regardless of electric-only range.

It then increases to 19% in April 2029 and 20% in April 2030.

For some drivers, particularly those currently benefiting from lower PHEV BIK percentages, these increases could have a noticeable impact on monthly vehicle affordability.

Certain qualifying PHEVs may benefit from HMRC's temporary emissions-testing easement and transitional arrangements. The specific vehicle and eligibility conditions should always be checked before calculating a final tax liability.

How Is Benefit-in-Kind Tax Calculated?

Calculating company car BIK tax is relatively straightforward.

Three key factors determine the amount payable:

P11D Value: The taxable list price of the vehicle, including qualifying accessories.
BIK Percentage: The Government's applicable percentage for the vehicle in the relevant tax year.
Income Tax Rate: The employee's applicable Income Tax rate.

The BIK Calculation

P11D Value × BIK Rate × Income Tax Rate ÷ 12 = Estimated Monthly BIK Tax

Example: £40,000 Electric Vehicle

Let's take a fully electric vehicle with a P11D value of £40,000 and an employee paying Income Tax at 40%.

For the 2026/27 tax year:

Vehicle P11D value: £40,000
BIK rate: 4%
Annual taxable benefit: £1,600
Income Tax rate: 40%
Annual BIK tax: £640

Estimated monthly BIK tax: £53.33

However, because BIK rates change over time, the amount payable will also increase during a longer vehicle lease.

Why Electric Vehicles Remain Attractive Through Salary Sacrifice

Despite the gradual increase in Benefit-in-Kind rates, fully electric vehicles continue to offer attractive tax advantages through salary sacrifice. A salary sacrifice car scheme allows eligible employees to exchange part of their gross salary for a vehicle benefit. Because qualifying salary sacrifice arrangements reduce gross salary before Income Tax and National Insurance contributions are calculated, employees can potentially achieve meaningful savings compared with leasing a vehicle privately.

The Benefits of Electric Vehicle Salary Sacrifice

Potential Income Tax and National Insurance savings
Eligible employees may reduce their Income Tax and employee National Insurance contributions through their gross salary sacrifice.
Favourable Benefit-in-Kind treatment
Fully electric vehicles attract significantly lower BIK percentages than many petrol and diesel company cars.
Predictable monthly costs
Depending on the scheme, packages can include maintenance, servicing, insurance and other motoring expenses.
Access to electric vehicles
Salary sacrifice can provide a more affordable route to driving an electric car, helping employees transition to electric motoring.
Reduced administration for employers

With the right platform and scheme administrator, employers can offer an attractive vehicle benefit while simplifying eligibility, approvals, payroll reporting and ongoing scheme management.

BIK Tax Is Only Part of the Picture

Although understanding BIK is important, it should not be considered in isolation. The actual take-home cost of a salary sacrifice vehicle depends on several factors, including the gross salary reduction, employee Income Tax and National Insurance savings, BIK charges, vehicle costs and any optional products. SalSac helps bring all these calculations together, providing employees with transparent vehicle quotations and employers with the tools needed to manage their scheme efficiently.

Frequently Asked Questions

What is Benefit-in-Kind (BIK) tax?

Benefit-in-Kind is a tax payable on certain benefits provided by an employer in addition to salary.

When a company car is made available for private use, the employee is generally taxed on the calculated value of that benefit.

What is the electric car BIK rate in 2026/27?

The Benefit-in-Kind rate for fully electric cars is 4% for the 2026/27 tax year.

This increases to 5% in April 2027, 7% in April 2028, 9% in April 2029 and 10% in April 2030.

What will EV BIK be in 2030?

The Government announced in Budget 2026 that fully electric vehicle BIK will increase to 10% for the 2030/31 tax year.

The change is planned to take effect from 6 April 2030, subject to legislation.

Are BIK rates confirmed beyond 2031?

No. As of October 2026, BIK percentages for the 2031/32 tax year and beyond have not yet been announced.

How do I find my vehicle's P11D value?

The P11D value is broadly based on the vehicle's taxable list price, including VAT and qualifying factory-fitted or optional accessories, but excluding certain charges. Your leasing provider, manufacturer or salary sacrifice administrator should be able to confirm the applicable value.

Does salary sacrifice reduce Benefit-in-Kind tax?

Salary sacrifice does not generally eliminate company car BIK tax. Instead, eligible salary sacrifice arrangements can reduce the employee's gross salary subject to Income Tax and National Insurance contributions, while the employee separately pays tax on the company-car benefit. The overall financial benefit depends on the circumstances of the employee and the vehicle.

Is BIK payable on an electric car?

Yes. Fully electric company cars are subject to Benefit-in-Kind tax when provided for private use.

However, their BIK percentages remain substantially lower than those applying to many petrol and diesel vehicles.

Will my BIK tax change during my lease?

Potentially, yes. BIK rates can change at the start of a new tax year, usually on 6 April. Your actual tax liability may also be affected by changes to your income, tax circumstances or vehicle arrangements. This is particularly important for leases lasting 36 or 48 months.

Are plug-in hybrid vehicles affected differently?

Yes. Plug-in hybrid BIK rates depend on their official emissions and, for the earlier tax years, electric-only range. From April 2028, the standard BIK rate for vehicles in the 1–50g/km CO₂ band increases to 18%. Some qualifying PHEVs may benefit from transitional or emissions-testing rules.

Does this calculator show the full cost of salary sacrifice?

No. The SalSac BIK Calculator shows an estimate of the employee's Benefit-in-Kind Income Tax only. A complete salary sacrifice quotation also considers gross salary deductions, Income Tax and National Insurance savings, vehicle costs, optional products and employer scheme rules.

Discover the Benefits of Electric Vehicle Salary Sacrifice with SalSac

Want the complete picture, not just the BIK figure?

Understanding Benefit-in-Kind is an important first step, but finding the right salary sacrifice arrangement involves much more than calculating company car tax.

SalSac provides an advanced salary sacrifice platform designed to make electric vehicle schemes simpler for employers, employees and leasing partners.

Our technology brings together vehicle quotations, employee eligibility, employer approvals, payroll reporting and ongoing scheme administration.

Whether you're an employer exploring salary sacrifice for your workforce, an employee interested in driving electric or a leasing partner looking for a technology-led solution, our team can help.

Discover how SalSac can help you offer or access electric vehicles through salary sacrifice.

Sources and Important Information

The BIK rates and projections presented on this page are based on published HMRC guidance and the UK Budget 2026 announcements.

Official sources:

Last reviewed: 29 October 2026.

Disclaimer: All calculations are illustrative and provided for general information purposes. Actual company car tax liabilities depend on individual circumstances and HMRC rules. The calculator assumes full-year vehicle availability, a consistent vehicle taxable value and a single marginal Income Tax rate. SalSac recommends obtaining a full personalised quotation before entering into any vehicle salary sacrifice agreement.