Answers · UK 2025/26
What is the electric vehicle benefit-in-kind rate for 2026/27?
The benefit-in-kind (BIK) rate for fully electric company cars is 5% of the car's P11D value in 2026/27, up from 4% in 2025/26. This is still extremely low compared to petrol or diesel cars (typically 20–37%), making electric company cars very tax-efficient for employees and employers.
Full answer
**What is the BIK rate for electric cars?** When an employer provides a company car for private use, the employee is taxed on the benefit. The taxable amount is calculated as: **P11D value × BIK % × income tax rate** For zero-emission electric vehicles: - 2025/26: 4% BIK rate - 2026/27: 5% BIK rate - 2027/28: 7% (scheduled) - 2028/29: 9% (scheduled) Rates are confirmed through to 2029/30. HMRC publishes the full table on GOV.UK. **Comparison with petrol/diesel** A petrol car with 120g/km CO₂ attracts a 29% BIK rate. This makes electric cars far more tax-efficient as company cars. **Example: Emma, basic-rate taxpayer** Emma is provided with an electric car with a P11D value of £40,000. - BIK value: 5% × £40,000 = £2,000 - Income tax (20%): £2,000 × 20% = **£400/year** (£33/month) - Employer Class 1A NI (15%): £2,000 × 15% = £300/year **Example: David, higher-rate taxpayer** - BIK value: 5% × £40,000 = £2,000 - Income tax (40%): £2,000 × 40% = **£800/year** (£67/month) **Compare with petrol equivalent (£40,000, 120g/km CO₂)** - BIK value: 29% × £40,000 = £11,600 - Emma (20%): £11,600 × 20% = £2,320/year - David (40%): £11,600 × 40% = £4,640/year **The charging issue** Employers can provide free home charging equipment and workplace charging without creating an additional BIK charge. However, if the employer pays for home charging electricity, this can create a BIK — take advice. **Employer NI saving via salary sacrifice** If the electric car is provided via salary sacrifice, the employer also saves 15% NI on the sacrificed salary amount. This is often shared with employees as an enhanced scheme.
More answers
This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.