How does Benefit in Kind (BiK) affect electric cars?

Benefit in Kind (BiK), often called “company car tax”, can sound complicated, and it’s natural to wonder how it applies to salary sacrifice for electric vehicles compared with petrol or hybrid cars. 

The short answer: yes, it does affect EVs, but usually far less than petrol or diesel cars. That said, everyone’s situation is slightly different, so it’s worth checking how it’d work for you. 

In this guide to BiK, we chat through:

• What is Benefit in Kind tax?
• How is Benefit in Kind tax calculated?
• What are the different Benefit in Kind tax rates?
• How does Benefit in Kind tax on an electric car compare with a hybrid or petrol car?
• What does the Benefit in Kind increase mean for EV drivers?
• How do I calculate the amount of BiK I’ll pay?

Benefit in Kind tax is the way HMRC charges tax on perks you get from your employer on top of your salary, like a company car. HMRC treats the benefit separately from your wage, which means the tax is deducted before the money hits your bank account.

If you use a company car for personal journeys, you’ll pay BiK tax each month from your salary. For electric cars, BiK rates are much lower than for petrol or diesel vehicles, which can make salary sacrifice a particularly cost-effective way to go electric.

Benefit in Kind tax is calculated based on two things: the car’s CO2 emissions and the car’s P11D value.

The P11D value is the list price of your car, including VAT, combined with any delivery charges (but doesn’t include the car’s first registration fee or annual road tax).

The BiK rates are calculated based on the car’s CO2 emissions.

Benefit-in-Kind remains low for EVs, but the rates are gradually increasing to: 

• 4% in April 2026
• 5% in April 2027
• 7% in April 2028
• 9% in April 2029

Despite these increases, EVs are still far more tax-efficient than petrol, diesel, or hybrid vehicles, which can have BiK rates of up to 37% depending on emissions.

Though Benefit in Kind for electric cars is increasing over the next five years, it’s staying much lower for EVs than for petrol, diesel, and hybrid vehicles. For non-EVs, it’s increasing quite dramatically.

Table showing maximum rates of BiK rates for each vehicle type.
Hybrid range based on 1-50g CO₂, non-ev based on 51g CO₂ and above.

If you already have an electric car through your employer you’ll continue to enjoy super low BiK rates.

If you’re looking to get a new car through your employer, consider leasing an EV through our salary sacrifice scheme. Not only will you make great savings on BiK rates, but you’ll also save money on tax/NI, fuel, insurance, and much more.

Our electric car salary sacrifice scheme is free for employers to join and can be set up within a matter of weeks.

If you’re thinking about going electric, now’s a great time to explore your options. With low Benefit in Kind rates, salary sacrifice savings, and lower running costs, an EV could cost less than you think.