The Spring Statement 2026 confirmed that the UK’s electric vehicle tax advantages remain largely intact — particularly for employees using salary sacrifice schemes.

As explained in this detailed breakdown by The Electric Car Scheme, the statement introduced no changes to electric car salary sacrifice rules or Benefit-in-Kind (BiK) rates, meaning drivers can still save 20–50% on a new EV compared with traditional leasing or personal purchase.

For businesses and employees considering switching to electric, the announcement reinforces that salary sacrifice remains one of the most tax-efficient ways to drive an EV in the UK.

In this guide, we break down what the Spring Statement means for EV drivers, what taxes actually apply to electric cars in 2026, and why salary sacrifice schemes continue to offer significant savings.

Are Electric Car Salary Sacrifice Schemes Changing?

The short answer: no.

The Spring Statement did not introduce any changes to EV salary sacrifice schemes.

Key points confirmed by the government:

• The Benefit-in-Kind (BiK) rate for electric cars remains at 3% for 2025/26
• It will increase to 4% from April 2026
• Rates will rise gradually to 9% by 2029/30

Even with these planned increases, electric vehicles remain dramatically cheaper from a tax perspective than petrol or diesel company cars, which can attract BiK rates up to 37%.

Because salary sacrifice payments are taken before income tax and National Insurance, drivers benefit from:

• lower taxable income
• reduced NI contributions
• extremely low company car tax on EVs

Combined, these factors can reduce the true monthly cost of an electric car by 20–50%.

Why the Government Still Supports EV Adoption

The Spring Statement highlighted an important structural issue: fuel duty revenue will eventually decline as EV adoption grows.

As more drivers switch to electric vehicles, the UK Treasury will collect less fuel tax. The Office for Budget Responsibility (OBR) has now started modelling this shift in its long-term forecasts.

Rather than slowing adoption, the government’s strategy is to manage the transition through gradual changes, such as:

• introducing road tax (VED) for EVs from 2025
• gradually increasing company car tax rates
• exploring future road-pricing systems

However, the broader policy direction remains clear: the UK still wants EV adoption to accelerate.

Salary sacrifice schemes play an important role because they allow employees to access electric cars without the high upfront costs typically associated with EV ownership.

How Much Does It Cost to Drive an Electric Car in 2026?

Several tax changes affecting EVs were introduced in recent years, but the Spring Statement itself did not add new costs.

Here is the current picture for UK EV drivers.

Benefit-in-Kind (Company Car Tax)

• EV rate: 3% (2025/26)
• Rising to 4% in April 2026
• Gradually increasing to 9% by 2029/30

This remains dramatically lower than petrol or diesel company car rates.

Vehicle Excise Duty (Road Tax)

Electric vehicles now pay road tax, but the rate remains relatively low.

Year 1

• EV: £10

Year 2 onwards

• Standard rate: £200 per year from April 2026

Expensive Car Supplement

Cars with high list prices pay an additional charge.

• EV threshold: £50,000
• Charge: £425 per year for five years

The threshold for EVs was increased from £40k to £50k, meaning many popular electric models avoid the supplement.

Congestion Charges and ULEZ

Electric vehicles still benefit from urban driving incentives.

In London:

• ULEZ charge: £0 for EVs
• Congestion Charge: discounted when registered with Auto Pay

These policies make EVs significantly cheaper to operate in cities.

Future Road Pricing (eVED)

From April 2028, the UK is expected to introduce a pay-per-mile system for electric vehicles.

Current proposals suggest:

• around 3p per mile
• average annual cost of ~£240 for typical drivers

This is designed to replace declining fuel duty revenue.

Why Salary Sacrifice Makes EVs Much Cheaper

Without salary sacrifice, EV leases are often priced similarly to premium petrol cars.

However, salary sacrifice dramatically reduces the real cost because:

1. Payments are taken from gross salary
2. Drivers pay minimal company car tax
3. Employers also save on National Insurance

This combination creates one of the most tax-efficient employee benefits currently available in the UK.

For many drivers, a £500/month lease could effectively cost £250–£350 per month after tax savings.

Employers benefit too because salary sacrifice schemes:

• support ESG goals
• help recruit and retain employees
• can be cost-neutral to implement

What the Spring Statement Signals for the Future of EVs

While the Spring Statement contained few new policy changes, it reinforced several long-term trends.

EV adoption is accelerating

Electric vehicles already account for over 20% of new car sales in the UK.

Government policy, manufacturer investment, and infrastructure expansion are all pushing the market toward electrification.

Fuel tax revenue will decline

As petrol and diesel vehicles disappear, the Treasury will lose billions in fuel duty revenue.

That is why we are seeing:

• road tax for EVs
• potential pay-per-mile systems
• gradual company car tax increases

EV incentives remain strong

Despite these adjustments, EVs still enjoy major advantages:

• lower company car tax
• lower running costs
• fewer city charges
• tax-efficient salary sacrifice schemes

For drivers considering the switch, the current window — with BiK still at just 3% — may represent the most favourable tax environment EVs will ever have.

FAQs: Electric Car Salary Sacrifice and the Spring Statement

Did the Spring Statement 2026 change EV salary sacrifice?

No. The Spring Statement introduced no changes to salary sacrifice rules or company car tax rates for electric vehicles.

What is the Benefit-in-Kind rate for electric cars in 2026?

The BiK rate is:

• 3% in 2025/26
• 4% from April 2026

It will gradually increase to 9% by 2029/30, still far lower than petrol or diesel cars.

Is road tax now required for electric vehicles?

Yes. Since April 2025, EVs pay road tax.

• £10 in the first year
• £200 per year from the second year

How much can you save with electric car salary sacrifice?

Savings typically range from 20–50% compared with personal leasing or financing.

The exact amount depends on:

• salary tax band
• car model
• employer scheme structure

Is salary sacrifice still worth it for electric cars?

For most employees, yes.

Because EVs have very low company car tax rates, salary sacrifice schemes remain one of the cheapest ways to drive a new electric vehicle in the UK.

John Ellmore

John is the Editor and Spokesperson for Electric Car Guide.

With over 20 years of writing experience, he has written for titles such as City AM, FE News and NerdWallet.com, covering various automotive and personal finance topics.

John’s market commentary has been covered by the likes of The Express, The Independent, Yahoo Finance and The Evening Standard.