Answers · UK 2025/26
What is the Benefit in Kind rate for electric cars in 2026/27?
Electric vehicles have a Benefit in Kind rate of 4% in 2026/27 — meaning a £40,000 EV creates a taxable BIK of £1,600, costing a 20% taxpayer just £320/year or a 40% taxpayer £640/year.
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Electric vehicles (EVs) benefit from dramatically lower Benefit in Kind (BIK) rates compared to petrol or diesel company cars — making them by far the most tax-efficient company car choice. **EV BIK rates roadmap:** | Tax year | EV BIK rate | |---|---| | 2022/23 | 2% | | 2023/24 | 2% | | 2024/25 | 3% | | 2025/26 | 4% | | **2026/27** | **4%** | | 2027/28 | 7% | | 2028/29 | 9% | **Worked example — £40,000 EV, 2026/27:** > BIK value = £40,000 x 4% = **£1,600** - Basic rate taxpayer: £1,600 x 20% = **£320/year (£27/month)** - Higher rate taxpayer: £1,600 x 40% = **£640/year (£53/month)** **Comparison with petrol car:** A £40,000 petrol car at 130g CO2 (30% BIK) creates £12,000 taxable BIK — a higher-rate taxpayer pays £4,800/year vs £640/year for the EV equivalent. **Salary sacrifice OpRA exemption:** Company EVs taken via salary sacrifice are **exempt from Optional Remuneration Arrangement (OpRA) rules** — meaning you still pay only 4% BIK even under salary sacrifice. For other cars, OpRA rules mean you pay BIK or the salary sacrificed (whichever is higher). **Employer Class 1A NI:** Employers pay **15% Class 1A NI** on the BIK value: for the £40,000 EV, that's £1,600 x 15% = **£240/year** — far lower than a petrol equivalent. **Charging at work:** HMRC provides a complete exemption for workplace EV charging — no BIK arises on electricity used to charge a company EV at the employer's premises.
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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.