Electric Company Car Tax Calculator

Electric Company Car Tax (BIK) Explained

An electric company car is one of the most tax-efficient benefits an employer can offer in the UK. Where a petrol or diesel company car can cost a higher-rate taxpayer thousands of pounds a year in Benefit in Kind (BIK) tax, a fully electric vehicle is taxed at just 3% of its list price for the 2025/26 tax year. This calculator works out exactly how much that costs you in pounds — both annually and monthly — and shows the saving against an equivalent petrol model. The figures are based on the appropriate-percentage schedule published by HMRC, which sets EV rates all the way to April 2028 to give company car drivers long-term certainty.

If you are weighing up a salary sacrifice EV scheme, deciding between a company car and a car allowance, or simply trying to budget for the tax code change that a new electric car will trigger, this page gives you a clear, HMRC-aligned answer in seconds. It is genuinely useful whether you are a basic-rate (20%), higher-rate (40%) or additional-rate (45%) taxpayer.

How the Calculator Works

Company car tax on an electric vehicle is calculated using the same three-part formula as any other company car, but with the very low zero-emission BIK percentage:

Annual Tax = P11D Value × BIK Percentage × Your Income Tax Rate

• P11D Value: The car's list price including VAT, delivery and factory-fitted options. It excludes the first registration fee and Vehicle Excise Duty (road tax). Any discount you negotiate does not reduce the P11D value.
• BIK Percentage: For a pure electric car (0g/km CO2) this is 3% in 2025/26, rising to 4% (2026/27), 5% (2027/28) and 7% (2028/29). You can switch between these years in the calculator above to see how your tax will change.
• Your Income Tax Rate: Your marginal rate — 20%, 40% or 45% — determines how much of the taxable benefit you actually hand to HMRC. The benefit is normally collected through an adjustment to your PAYE tax code.

The calculator multiplies these three values together client-side (nothing leaves your browser), then divides the annual figure by 12 to give a monthly cost. It also applies your chosen petrol comparison rate to the same P11D value so you can see the saving at a glance.

Worked Example: £45,000 Electric Car

Suppose you are offered a £45,000 electric company car and you are a higher-rate (40%) taxpayer in the 2025/26 tax year:

• Taxable benefit (BIK value): £45,000 × 3% = £1,350
• Annual tax: £1,350 × 40% = £540 per year
• Monthly tax: £540 ÷ 12 = £45 per month

A basic-rate (20%) taxpayer would pay just £1,350 × 20% = £270 a year (£22.50 a month) for the same car. Now compare that with an equivalent £45,000 petrol car emitting around 120g/km, which sits at a 29% BIK rate:

• Petrol taxable benefit: £45,000 × 29% = £13,050
• Higher-rate tax on petrol: £13,050 × 40% = £5,220 per year

The electric car therefore saves a higher-rate taxpayer roughly £4,680 every year compared with the petrol equivalent — and that is before you account for cheaper "fuel", no fuel benefit charge, and lower running costs. This enormous gap is the single biggest reason electric company cars and salary sacrifice EV schemes have become so popular.

The EV BIK Rate Schedule (2025/26 to 2028/29)

HMRC has confirmed the appropriate percentages for zero-emission cars several years in advance. The rate rises by one percentage point a year, then by two points in 2028/29:

• 2025/26: 3%
• 2026/27: 4%
• 2027/28: 5%
• 2028/29: 7%

Even at 7% in 2028/29, an electric car remains dramatically cheaper to run as a company car than a petrol or diesel model in the 25%–37% range. The slow, pre-announced rise is deliberate government policy to keep incentivising the switch to electric while gradually closing the tax gap.

The Factors and Rules That Matter

• No fuel benefit charge on electricity: HMRC does not treat electricity as a fuel for the car fuel benefit charge. So even if your employer pays for all your charging, there is no separate fuel benefit tax on a pure EV. For comparison, a petrol or diesel driver with employer-paid private fuel is taxed on £28,200 × their BIK percentage in 2025/26.
• Salary sacrifice is exempt from the OpRA rules: Ultra-low-emission vehicles (75g/km or less) are exempt from the Optional Remuneration Arrangement (OpRA) restrictions, which is what makes electric salary sacrifice so efficient — you keep the Income Tax and National Insurance savings on the sacrificed salary.
• Capital contributions: You can make a capital contribution of up to £5,000 towards the cost of the car, which reduces the P11D value used for BIK. On an EV the saving is modest because the rate is already so low, but it can still help.
• Employer Class 1A NIC: Your employer pays Class 1A National Insurance at 15% on the taxable benefit. For a £45,000 EV that is £1,350 × 15% = £202.50 a year — a fraction of the £1,891.50 they would pay on the £13,050 benefit of an equivalent petrol car.
• Plug-in hybrids are different: This calculator is for pure electric (0g/km) cars. Plug-in hybrids emitting 1–50g/km are taxed at 3%–14% depending on their electric-only range. Use our company car tax calculator for hybrids, petrol and diesel cars.

Company Car vs Car Allowance for an EV

Because the BIK rate on electric cars is so low, taking the company car (or a salary sacrifice EV) is usually far better value than a cash car allowance, which is taxed in full as salary. A £6,000 cash allowance taxed at 40% leaves you with £3,600 — whereas an electric company car of similar value costs you only a few hundred pounds in BIK. The main exceptions are very low-mileage drivers who already own a suitable car, or those who place a high value on choosing and owning the vehicle outright.

Reporting and Your Tax Code

Your employer reports the car to HMRC either through payrolling of benefits or via the annual P11D form (due by 6 July after the tax year ends). HMRC then adjusts your PAYE tax code so the BIK tax is collected gradually across the year. If you change or return the car part-way through the year, tell both your employer and HMRC promptly so your code is corrected and you neither over- nor under-pay.

Sources: Tax on company cars (gov.uk), Car and van fuel benefit charges 2025 to 2026 (gov.uk), Expenses and benefits: company cars (gov.uk). Last verified: June 2026.