Electric vehicle (EV) Benefit-in-Kind (BIK) rates remain one of the strongest financial incentives for UK businesses and employees considering electric company cars. While BIK rates for EVs are rising gradually, they are still significantly lower than petrol or diesel equivalents, making EV salary sacrifice and company car schemes highly tax-efficient in 2026.
This guide explains EV BIK rates for 2025/26 and 2026/27, how they are calculated, how they compare to petrol and hybrid cars, and what they mean for employees and employers.
What is Benefit-in-Kind (BIK)?
Benefit-in-Kind (BIK) is a tax applied to non-cash benefits provided by an employer, such as a company car. Instead of paying tax on the full value of the vehicle, employees pay tax on a percentage of the car’s list price, known as the BIK rate.
For company cars, the BIK rate is influenced by:
- Fuel type
- CO₂ emissions
- The relevant UK tax year
Because electric vehicles produce zero tailpipe emissions, they attract much lower BIK rates than petrol or diesel cars.
Current EV BIK Rates (2026 Explained)
EV BIK rates are set by the UK government and confirmed in advance to give businesses certainty.
EV BIK Rates by Tax Year
| UK Tax Year | EV BIK Rate |
|---|---|
| 2024/25 | 2% |
| 2025/26 | 3% |
| 2026/27 | 4% |
| 2027/28 | 5% |
These gradual increases were designed to maintain incentives for EV adoption while slowly normalising company car taxation.
Even at 4% in 2026/27, EVs remain dramatically cheaper to tax than petrol or diesel company cars, which can attract BIK rates of 25–37%.
How EV BIK is Calculated
To calculate your EV BIK tax:
- Start with the P11D value
This is the car’s list price including options, excluding the Plug-in Car Grant. - Apply the EV BIK rate for the tax year
Example (2026/27):
£40,000 × 4% = £1,600 taxable benefit - Apply your personal income tax rate
- 20% taxpayer: £320 per year
- 40% taxpayer: £640 per year
This is why EV salary sacrifice remains so attractive in 2026.
EV BIK vs Petrol and Diesel Cars
EVs continue to enjoy a substantial tax advantage.
- Electric cars (2026/27): 4% BIK
- Petrol cars: typically 20–37% BIK depending on emissions
- Diesel cars: often even higher due to diesel supplements
This gap is the core reason many businesses are switching their company car fleets to electric vehicles.
What About Hybrid and Plug-in Hybrid Cars?
Hybrid BIK rates vary based on:
- CO₂ emissions
- Electric-only driving range
Plug-in hybrids (PHEVs) with longer electric ranges attract lower BIK rates than self-charging hybrids, but still cannot match EVs for tax efficiency.
As BIK rules tighten over time, many businesses are moving straight from hybrids to fully electric vehicles.
Does EV BIK Change Based on Car Size or Value?
No.
The BIK percentage for EVs is the same regardless of vehicle size or price.
A small electric hatchback and a large electric SUV are taxed at the same BIK rate — the only difference is the list price used in the calculation.
Does the Age of the EV Affect BIK?
No.
BIK rates do not change based on whether the EV is new or used. The applicable BIK rate is determined by:
- The tax year
- The vehicle’s emissions category
This is why used EV salary sacrifice schemes can still deliver strong tax savings.
Workplace EV Charging and BIK
There is no BIK charge for:
- Workplace EV charging
- Employer-provided electricity for charging at work
This makes employer-funded charging one of the most tax-efficient employee benefits available.
The UK government also continues to support installations through the Workplace Charging Scheme.
Fuel Cards and EV BIK Rules
EV-Only Charging Cards
If a fuel card is used only for EV charging, there is no taxable benefit.
Mixed-Fuel Cards
If a card can be used for petrol or diesel, normal fuel benefit rules apply and a taxable benefit may arise.
EV BIK Rates and Salary Sacrifice Schemes
EVs provided through salary sacrifice schemes are still subject to BIK — but because EV BIK rates are so low, salary sacrifice remains one of the cheapest ways to run a new electric car in 2026.
This is why EV salary sacrifice adoption continues to grow across UK businesses of all sizes.
EV Benefit-in-Kind FAQs
What is the EV BIK rate in the UK for 2026?
For the 2026/27 tax year (from 6 April 2026), the EV BIK rate is 4%.
Was EV BIK 3% in 2025?
Yes. The EV BIK rate for the 2025/26 tax year was 3%.
Will EV BIK rates keep rising?
Yes. EV BIK rates are scheduled to rise gradually, reaching 5% in 2027/28, with further increases expected later in the decade.
Is EV salary sacrifice still worth it in 2026?
Yes. Even at 4% BIK, EVs remain far cheaper to tax than petrol or diesel company cars, making salary sacrifice highly attractive.
Do EVs pay the same BIK regardless of size?
Yes. EV BIK rates are applied uniformly, regardless of vehicle size or body style.
Is there BIK on workplace EV charging?
No. Workplace EV charging is exempt from BIK tax.
Final Thoughts on EV BIK in 2026
Although EV BIK rates are rising gradually, electric vehicles remain one of the most tax-efficient employee benefits available in the UK.
For businesses, EVs offer:
- Predictable tax treatment
- Strong recruitment and retention benefits
- Alignment with sustainability goals
For employees, they continue to deliver substantial savings compared to private ownership or petrol company cars.
Electric Car Guide does not provide tax advice. This article is for informational purposes only and is accurate at the time of writing. Be aware that UK tax legislation may change and you should consult your accountant if you need advice specific to your personal circumstance.
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.
Mark Tubby is a qualified accountant from Steve Pye & Co Chartered Certified Accountants.
Mark has over 25 years of experience advising businesses on company tax legislation and is the Electric Car Guides contributor for all things tax.
