Electric Car Tax Benefit Calculator

Q: What is benefit-in-kind (BiK) tax on a company car?

Benefit-in-kind (BiK) is a tax you pay when your employer provides you with a company car for private use. HMRC treats the benefit as additional income. The taxable amount is calculated as the car's P11D value multiplied by the BiK percentage for that vehicle, then multiplied by your income tax rate.

Q: What is the BiK rate for electric cars in 2025/26?

The benefit-in-kind rate for pure electric (zero emission) company cars is 3% for the 2025/26 tax year. This rate rises by 1 percentage point each year: 4% in 2026/27, 5% in 2027/28, up to 9% by 2030/31.

Q: How do I calculate my electric company car tax?

Multiply the car's P11D value (list price including options, VAT, and delivery charges, minus first registration fee) by the BiK percentage (3% for EVs in 2025/26). This gives your taxable benefit. Then multiply by your income tax rate (20% or 40%) to get your annual BiK tax bill.

Q: Is an electric company car worth it compared to a cash allowance?

For most employees, an electric company car is significantly cheaper than taking a cash allowance and buying/leasing privately. The 3% BiK rate means even a £40,000 EV only generates £240/year in tax for a basic rate taxpayer, versus thousands in personal costs for an equivalent private arrangement.

Q: What is the P11D value of a car?

The P11D value is the list price of the car including VAT, delivery charges, and any options or accessories, but excluding the first registration fee and road tax (VED). It is used by HMRC to calculate the taxable benefit for BiK purposes.

Q: Does charging an electric company car at home affect my BiK?

No. HMRC does not charge additional BiK if your employer pays for or reimburses the cost of charging an electric company car at your home. This is a specific exemption for EVs, making them even more attractive as company cars.

Company Car BiK Tax Calculator 2025/26

P11D Value (£)

Your Income Tax Rate

EV Car Type

Petrol CO2 for comparison (g/km)

Your BiK Tax Comparison

Electric Car (EV)

Annual BiK tax

Petrol Equivalent

Annual BiK tax

EV Taxable Benefit-

EV BiK Rate-

EV Monthly Tax-

Petrol Taxable Benefit-

Petrol BiK Rate-

Petrol Monthly Tax-

Annual Saving with EV-

5-Year Saving with EV-

Mustafa Bilgic Tax & EV Specialist — Updated 20 Feb 2026

BiK 2025/26HMRC Rates

What Is Benefit-in-Kind (BiK) Tax?

When your employer provides you with a company car that you can also use for personal journeys, HMRC treats this as a taxable benefit – a benefit in kind (BiK). You pay income tax on the monetary value of that benefit, just as if it were additional salary.

The system is designed to tax the private use of an asset provided by your employer. The taxable value is calculated using the car's P11D value (the manufacturer's list price plus options) multiplied by a percentage that reflects the car's CO2 emissions and fuel type.

For 2025/26, this system strongly favours electric vehicles. A pure electric company car attracts a BiK rate of just 3%, compared to rates of 25–37% for typical petrol and diesel equivalents. The savings can be dramatic, particularly for higher-rate taxpayers.

BiK Rates by Vehicle Type 2025/26

HMRC sets BiK percentages for each tax year. The rates below apply for 2025/26:

Vehicle Type / CO2 (g/km)	2025/26 BiK %	2026/27 BiK %	2027/28 BiK %
Pure Electric (0g/km)	3%	4%	5%
PHEV (0–50g, 130+ miles EV range)	5%	6%	7%
PHEV (0–50g, 70–129 miles range)	8%	9%	10%
PHEV (0–50g, 40–69 miles range)	12%	13%	14%
PHEV (0–50g, under 40 miles range)	14%	15%	16%
51–75g/km	17%	18%	19%
76–90g/km	21%	22%	23%
91–100g/km	24%	25%	26%
101–110g/km	26%	27%	28%
111–130g/km	28%	29%	30%
131–150g/km	31%	32%	33%
151–170g/km	34%	35%	36%
Over 170g/km	37%	37%	37%

Key point: Diesel company cars pay a 4% surcharge on top of the CO2-based rate (up to a maximum of 37%), unless they meet the RDE2 standard for real-world emissions. This makes diesel company cars particularly expensive from a BiK perspective.

Worked Example: Electric vs Petrol Company Car

Let's compare two cars with a P11D value of £40,000: a Tesla Model 3 (pure electric) versus a BMW 3 Series (130g/km petrol), for a basic rate (20%) and higher rate (40%) taxpayer in 2025/26.

Tesla Model 3 Long Range (P11D: £40,000, 0g CO2)

BiK rate: 3%
Taxable benefit: £40,000 × 3% = £1,200
Basic rate taxpayer tax: £1,200 × 20% = £240/year (£20/month)
Higher rate taxpayer tax: £1,200 × 40% = £480/year (£40/month)

BMW 3 Series 320i (P11D: £40,000, 130g CO2)

BiK rate: 28%
Taxable benefit: £40,000 × 28% = £11,200
Basic rate taxpayer tax: £11,200 × 20% = £2,240/year (£187/month)
Higher rate taxpayer tax: £11,200 × 40% = £4,480/year (£373/month)

Annual Saving by Choosing EV

Basic rate taxpayer: £2,240 − £240 = £2,000 saved per year
Higher rate taxpayer: £4,480 − £480 = £4,000 saved per year
Over 4 years: £8,000 to £16,000 saved

EV BiK Rate Projections: 2025–2031

The government has published EV BiK rates up to 2030/31, allowing employees and employers to plan ahead. The rates rise by 1% per year for pure electric vehicles:

Tax Year	EV BiK Rate	Tax on £40k EV (20%)	Tax on £40k EV (40%)
2025/26	3%	£240	£480
2026/27	4%	£320	£640
2027/28	5%	£400	£800
2028/29	6%	£480	£960
2029/30	7%	£560	£1,120
2030/31	9%	£720	£1,440

Even by 2030/31, the BiK tax on an EV remains dramatically lower than equivalent petrol cars, which will pay 25–37%. The government's commitment to published future rates gives confidence to employees choosing EVs on multi-year company car schemes.

P11D Value Explained

The P11D value is the official value HMRC uses to calculate company car BiK tax. It is NOT the price you or your employer paid for the car. The P11D value includes:

The manufacturer's list price of the car
VAT
Delivery charges
The cost of any optional extras or accessories
Any convertible roof or tow bar (added later)

The P11D value does not include:

The first registration fee (currently £65)
Annual road tax (VED)

Your employer reports the P11D value to HMRC each tax year on a form P11D. HMRC then adjusts your tax code to collect the BiK tax through PAYE. Always check your tax code notice (P2) to ensure the correct P11D value has been used.

Employer Benefits: National Insurance on Company Cars

BiK tax is not just an employee concern. Employers also pay Class 1A National Insurance Contributions (NICs) on the value of benefits provided to employees, at 13.8% of the taxable benefit value.

For an electric car with a P11D of £40,000 and 3% BiK rate in 2025/26:

Taxable benefit: £1,200
Employer NIC: £1,200 × 13.8% = £165.60/year

Compare this to the petrol equivalent (130g/km, 28% BiK):

Taxable benefit: £11,200
Employer NIC: £11,200 × 13.8% = £1,545.60/year

The employer saves over £1,380 per year in NICs per employee by providing an EV instead of a petrol car. This is a significant incentive for fleet managers to transition to electric vehicles.

Salary Sacrifice for Electric Cars

Many UK employers now offer electric car salary sacrifice schemes, which combine the low BiK rate with income tax and NI savings on the salary given up. This can make a brand-new EV extremely cost-effective.

In a salary sacrifice arrangement, you agree to a reduction in gross salary in exchange for the use of a company car. You save:

Income tax on the sacrificed salary amount
Employee National Insurance on the sacrificed amount
Only pay BiK tax at 3% on the P11D value

Example: A higher rate taxpayer sacrificing £600/month gross for a Tesla Model 3 would save 40% income tax + 2% NIC = 42% = £252/month in tax savings, leaving a net cost of just £348/month for a car worth £45,000 list price.

Note: Salary sacrifice works best for higher earners. For those near the minimum wage, reduced salary may cause issues. Always check that the arrangement does not affect any earnings-linked benefits such as mortgage applications or pension contributions.

Charging at Home: The HMRC Exemption

One of the most tax-efficient aspects of an electric company car is the ability to charge at home without creating an additional taxable benefit. HMRC grants a specific exemption for this.

If your employer pays for or reimburses the cost of electricity used to charge your company EV at home, this is completely tax-free. There is no BiK charge for this benefit. In practice, this means:

Your employer can cover your home charging costs without any tax implications
The equivalent "free fuel" benefit for petrol cars would generate a significant additional BiK charge (£27,800 × BiK rate in 2025/26)
Many employers install free charge points at workplaces – also tax-free

This exemption makes the total cost of running an electric company car even lower than the BiK rate alone suggests.

Frequently Asked Questions

What is benefit-in-kind (BiK) tax on a company car?

Benefit-in-kind (BiK) is a tax paid when your employer provides a company car available for private use. HMRC treats it as additional income. Your taxable benefit equals the car's P11D value multiplied by the BiK percentage for that car (determined by CO2 emissions and fuel type). You then pay income tax at your marginal rate (20%, 40%, or 45%) on that taxable benefit amount.

What is the BiK rate for electric cars in 2025/26?

The BiK rate for pure electric (zero emission) company cars is 3% for the 2025/26 tax year. This compares to 25–37% for typical petrol cars. The rate rises by 1 percentage point each tax year: 4% in 2026/27, 5% in 2027/28, reaching 9% in 2030/31. Even at these future rates, EVs remain far cheaper to run as company cars than combustion engine equivalents.

How do I calculate my electric company car tax?

The formula is: P11D value × BiK rate % = taxable benefit, then taxable benefit × income tax rate = annual BiK tax. Example: £40,000 Tesla × 3% = £1,200 taxable benefit × 20% tax rate = £240/year (£20/month). For a higher rate taxpayer: £1,200 × 40% = £480/year (£40/month). This is collected through your PAYE tax code.

Is an electric company car worth it compared to a cash allowance?

For most employees, an EV company car is significantly more cost-effective than taking a cash allowance. At 3% BiK, even a £50,000 EV costs a basic rate taxpayer just £300/year in BiK tax. A cash allowance equivalent would be taxed as normal income, with the full amount subject to income tax and NI. The saving is even more pronounced via a salary sacrifice scheme.

What is the P11D value of a car?

The P11D value is the car's list price including VAT, delivery charges, and all factory options, but excluding the first registration fee and road tax. It is not necessarily the price paid – even if you negotiate a discount, the P11D is based on the official list price. Your employer submits a form P11D to HMRC each year showing this value, and HMRC adjusts your tax code accordingly.

Does charging an electric company car at home affect my BiK?

No. HMRC provides a specific exemption: if your employer pays for or reimburses home charging costs for an electric company car, this creates no additional BiK tax liability. This contrasts with petrol, where employer-provided fuel for private use creates a large additional benefit (the fuel benefit charge is based on a fixed notional value of £27,800 multiplied by the car's BiK rate in 2025/26).

What is the fuel benefit charge for petrol company cars?

If your employer pays for private fuel in a petrol or diesel company car, you pay BiK tax on a notional value of £27,800 (2025/26) multiplied by the car's CO2-based BiK rate. For a 130g/km car (28% rate), that is £27,800 × 28% = £7,784 extra taxable benefit, costing a higher-rate taxpayer £3,113 extra per year. This makes employer-provided fuel rarely worthwhile for petrol car drivers.

What happens to my BiK tax if I have the car for part of a year?

BiK tax is prorated if you have the car for only part of the tax year. If the car is available for 9 months out of 12, you pay 9/12 of the annual BiK tax. If the car is unavailable for 30 or more consecutive days (e.g., for repair), that period can be deducted. HMRC prorates automatically via your tax code adjustments reported by your employer on the P46(Car) form.