Calculate Electric Car BIK Tax
Enter your electric car's P11D value and tax band to see your annual Benefit in Kind tax liability.
The list price including delivery and options
Annual BIK Tax
Monthly Cost
Taxable Benefit
EV Salary Sacrifice Calculator
Calculate your true cost when leasing an electric car through salary sacrifice.
Net Monthly Cost
Monthly Tax Savings
Annual Savings
Breakdown
Electric vs Petrol/Diesel Comparison
Compare the tax costs between an electric company car and a petrol/diesel equivalent.
Typically 25-37% for petrol/diesel
Electric (3% BIK)
Petrol/Diesel
Annual Savings
Tax Over 4 Years (BIK Rate Increases)
| Vehicle Type | Year 1 | Year 2 | Year 3 | Year 4 | Total |
|---|
Electric Car BIK Rates 2024-2029
HMRC has confirmed BIK rates for electric vehicles through to 2027/28, with provisional rates to 2029.
| Tax Year | Pure Electric (0g) | PHEV 1-50g (50+ miles) | PHEV 1-50g (<50 miles) |
|---|---|---|---|
| 2025/26 | 2% | 2% | 5% |
| 2025/26 | 3% | 3% | 7% |
| 2026/27 | 4% | 4% | 9% |
| 2027/28 | 5% | 5% | 11% |
| 2028/29 (provisional) | 7% | 7% | 14% |
A £45,000 electric car at 7% BIK costs a higher-rate taxpayer just £1,260/year. The same car as petrol at 30% BIK would cost £5,400/year - a saving of over £4,000 annually.
Petrol/Diesel BIK Rates 2025/26
| CO2 Emissions (g/km) | Petrol BIK Rate | Diesel BIK Rate (+4%) |
|---|---|---|
| 51-54 | 15% | 19% |
| 55-59 | 16% | 20% |
| 70-74 | 19% | 23% |
| 95-99 | 24% | 28% |
| 120-124 | 29% | 33% |
| 150-154 | 35% | 37% (capped) |
| 170+ | 37% | 37% |
Popular Electric Cars in the UK 2025
The UK electric car market has grown significantly, with over 30% of new car registrations now being pure electric vehicles. Here are some popular models and their estimated BIK costs:
| Model | P11D Value | Range (WLTP) | BIK Tax (40%) |
|---|---|---|---|
| Tesla Model 3 | £42,990 | 318 miles | £516/year |
| Tesla Model Y | £44,990 | 331 miles | £540/year |
| BMW i4 | £53,390 | 365 miles | £641/year |
| Hyundai Ioniq 6 | £46,745 | 338 miles | £561/year |
| Volkswagen ID.4 | £44,325 | 323 miles | £532/year |
| Kia EV6 | £48,095 | 328 miles | £577/year |
| MG4 EV | £26,995 | 281 miles | £324/year |
| Polestar 2 | £44,950 | 406 miles | £539/year |
* BIK tax calculated at 3% rate for 2025/26, 40% income tax band. Actual P11D values may vary with options.
How EV Salary Sacrifice Works
Electric vehicle salary sacrifice is one of the most tax-efficient ways to drive a new car in the UK. Here's how it works:
Choose Your EV
Select an electric car from your employer's scheme provider (Octopus, Tusker, etc.)
Salary Sacrifice
Your gross salary is reduced by the lease amount before tax is calculated
Save Tax & NI
You save Income Tax and National Insurance on the sacrificed amount
Pay Low BIK
You pay just 3% BIK tax on the car's P11D value (2025/26)
Without salary sacrifice: PCH lease of £500/month = £6,000/year from net income
With salary sacrifice (40% taxpayer):
- Gross sacrifice: £500/month = £6,000/year
- Tax saved: £2,400 (40% of £6,000)
- NI saved: £120 (2% of £6,000)
- BIK tax paid: £540 (£45,000 x 3% x 40%)
- Net cost: £4,020/year vs £6,000 = £1,980 saved
UK EV Salary Sacrifice Providers
| Provider | Key Features | Minimum Employees |
|---|---|---|
| Octopus Electric Vehicles | Large EV selection, Octopus Energy integration, home charger included | 50+ |
| Tusker | Wide brand range, maintenance included, flexible terms | 100+ |
| LeasePlan | Fleet management, extensive network, corporate focus | 500+ |
| Salary Sacrifice Cars | Pure EV focus, competitive rates, fast delivery | 50+ |
| Fleet Evolution | Family-run, personal service, whole market access | 25+ |
EV Running Costs vs Petrol/Diesel
Beyond tax savings, electric cars offer significant running cost advantages:
Charging Costs
- Home charging: 7-10p/mile
- Workplace (free): £0/mile
- Public rapid: 15-25p/mile
- Petrol equivalent: 18-25p/mile
Maintenance Savings
- No oil changes required
- Regenerative braking saves brakes
- Fewer moving parts
- 40-50% lower servicing costs
Other Savings
- No London Congestion Charge
- Free parking in some councils
- Lower insurance (typically)
- Road tax: £0 to 2025, £195 from April 2025
Annual Running Cost Comparison
| Cost Category | Electric Car | Petrol Car | Savings |
|---|---|---|---|
| Fuel/Electricity (10,000 miles) | £800 | £2,000 | £1,200 |
| Road Tax (2025/26) | £195 | £190 | -£5 |
| Servicing | £200 | £400 | £200 |
| BIK Tax (£45k, 40%) | £540 | £5,400 | £4,860 |
| Total Annual Cost | £1,735 | £7,990 | £6,255 |
Electric Company Car vs Personal Car
Should you take an electric company car or receive a car allowance? Here's a comparison:
Company EV Benefits
- Ultra-low 3% BIK tax rate
- Insurance included in lease
- Maintenance included
- No depreciation risk
- Free workplace charging
Car Allowance Benefits
- Freedom to choose any car
- Keep the car when leaving
- Mileage claims available
- No BIK tax on allowance
- Build equity in the car
Unlike company car BIK, a car allowance is taxed as income at your marginal rate. A £500/month allowance costs a 40% taxpayer £200/month in tax alone, making a company EV often more cost-effective.
UK Electric Car Incentives 2025
The UK government continues to support electric vehicle adoption with various incentives:
| Incentive | Value | Eligibility |
|---|---|---|
| EV Chargepoint Grant | Up to £350 | Flat/apartment residents and landlords |
| Workplace Charging Scheme | Up to £350/socket (max 40) | Businesses installing workplace chargers |
| Low BIK Tax Rates | 3% (vs 20-37% petrol) | Zero-emission company cars |
| First Year Allowances | 100% capital allowance | Business purchase of new EVs |
| Enhanced Capital Allowances | 100% first year | EV charging infrastructure |
| Zero Rate Road Tax | £0 (until April 2025) | All zero-emission vehicles |
From 1 April 2025, EVs will pay standard road tax (£195/year for most EVs). However, EVs registered before April 2017 remain exempt. The Expensive Car Supplement (additional £410/year for cars over £40,000) will also apply to EVs from 2025.
Frequently Asked Questions
The Benefit in Kind (BIK) tax rate for pure electric cars (0g/km CO2) is 3% in 2025/26. This is calculated as: Car P11D value x 3% x your income tax rate. For example, a £45,000 EV would have a taxable benefit of £1,350, costing a 40% taxpayer £540/year in BIK tax.
Yes, EV salary sacrifice remains highly beneficial in 2025. You save Income Tax (20-45%) and National Insurance (2-12%) on the sacrificed salary amount, while only paying BIK tax at 3%. For a higher rate taxpayer sacrificing £500/month for a £45,000 EV, the net cost is approximately £280/month instead of £500 - a saving of over £2,600 annually including BIK tax.
Yes, from 1 April 2025, electric vehicles will pay road tax for the first time. Most EVs will pay the standard rate of £195/year. Additionally, EVs with a list price over £40,000 will be subject to the Expensive Car Supplement, adding £410/year for the first 5 years. EVs registered before April 2017 remain exempt.
No, free electricity for charging EVs at workplace chargers is completely tax-free. This exemption applies to both company cars and personal vehicles. The government has confirmed this exemption will continue until at least April 2025 to encourage EV adoption. This can save employees hundreds of pounds annually.
Salary sacrifice reduces your gross salary, which can affect mortgage applications as lenders consider your reduced salary. However, many lenders now understand salary sacrifice and may consider your pre-sacrifice salary. It's advisable to speak with a mortgage adviser before starting a salary sacrifice scheme, especially if you're planning to apply for a mortgage within 6-12 months.
If you leave your job during an EV salary sacrifice agreement, you typically have options: transfer the lease to a new employer (if they participate), take over the lease personally (usually at a higher rate), or pay an early termination fee. Most schemes have a notice period of 1-3 months. Check your specific scheme terms before signing up.
Yes, you can claim mileage for business travel in an electric company car. The HMRC Advisory Electricity Rate (AER) for EVs is 9p/mile (as of 2025/26). This covers the cost of electricity for business journeys. If your employer pays for your home electricity for charging, this may create a benefit in kind, so check with your employer's policy.
Plug-in hybrids with 1-50g/km CO2 emissions have higher BIK rates than pure EVs. In 2025/26, PHEVs with 50+ mile electric range pay 3% BIK (same as pure EVs), but those with under 50 miles range pay 7%. This makes pure EVs more tax-efficient for most users. Additionally, PHEVs still require petrol, so running costs are higher than pure EVs.
Last updated: January 2026 | Verified with latest UK rates
Expert Reviewed — This calculator is reviewed by our team of financial experts and updated regularly with the latest UK tax rates and regulations. Last verified: January 2026.
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Understanding Your Results
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- 2025/26 updated - Using current rates and regulations
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