Answers · UK 2025/26
What is the benefit-in-kind (BIK) rate for electric company cars in the UK for 2026/27?
The BIK rate for fully electric company cars is 3% for 2026/27, rising to 4% in 2027/28 and 5% in 2028/29. This compares to 25-37% for petrol or diesel cars. The low rate makes electric company cars highly tax-efficient for both employees and employers.
Full answer
Company car benefit-in-kind (BIK) tax is calculated on the car's P11D value (list price including accessories) multiplied by the BIK percentage. The employee then pays income tax on this figure, and the employer pays Class 1A NI. Electric car BIK rates (zero g/km CO2): - 2026/27: 3% - 2027/28: 4% - 2028/29: 5% Comparison with petrol cars: - A petrol car emitting 121-130g/km CO2: 28% BIK in 2026/27. - A diesel car emitting 111-120g/km: 30% BIK (plus 4% diesel supplement = 34%). - Petrol/diesel BIK rates range from 20% to 37% depending on CO2 emissions. Worked example (electric car): - P11D value: £45,000 - BIK rate: 3% - Taxable benefit: £45,000 x 3% = £1,350 - Employee's income tax (40% taxpayer): £1,350 x 40% = £540/year - Employer's Class 1A NI (15%): £1,350 x 15% = £202.50/year Worked example (petrol equivalent): - Same £45,000 car at 28% BIK: taxable benefit £12,600 - Employee's income tax (40%): £5,040/year - Employer's Class 1A NI (15%): £1,890/year Salary sacrifice for electric cars: - Under the Optional Remuneration Arrangements (OpRA) rules, salary sacrifice for cars is usually taxed on the higher of the BIK value or the salary foregone. - Exception: fully electric and ultra-low emission cars (under 75g/km) are excluded from OpRA, meaning salary sacrifice for electric cars uses the actual (low) BIK value, making them extremely tax-efficient. Charging at work: - Employer-provided workplace charging for electric company cars is a tax-free benefit.
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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.