What Are the UK EV Benefit-in-Kind Rates for 2026 to 2028?
HMRC's Benefit-in-Kind (BIK) schedule for zero-emission company cars was confirmed and extended through to 2029/30 in the 26 November 2025 Autumn Budget, giving fleet managers and salary sacrifice scheme operators a fixed runway to model total cost of ownership. Unlike petrol and diesel BIK bands — which are tied to CO2 emissions and can exceed 37% — zero-emission vehicles remain the cheapest company car option throughout this entire window.
Year-by-Year BIK Percentage Schedule
| Tax Year | EV BIK Rate | Notes |
|---|---|---|
| 2025/26 | 3% | Final year of the sub-4% band |
| 2026/27 | 4% | First confirmed step-up |
| 2027/28 | 5% | Final year before the larger jump |
| 2028/29 | 7% | Two-point increase — plan renewals ahead of this |
| 2029/30 | 9% | Last confirmed year in the current schedule |
How to Calculate Your Annual EV BIK Liability
The formula is: P11D value × BIK % × personal tax rate (20%, 40%, or 45%) = annual tax owed. For example, a Tesla Model 3 with a P11D value of £42,000 in the 2026/27 tax year (4% band) for a 40% taxpayer:
- £42,000 × 4% = £1,680 taxable benefit
- £1,680 × 40% = £672 annual BIK tax (£56/month)
Compare this to an equivalent diesel estate on a 37% BIK band: £42,000 × 37% × 40% = £6,216 a year — nearly 9x more expensive for the same salary sacrifice or company car allocation.
Employer National Insurance and P11D Considerations
Employers also pay Class 1A National Insurance on the same taxable benefit figure. Following the rise in employer NIC rates that took effect in April 2025, Class 1A NIC for 2026/27 is 15% — not the older 13.8% rate still quoted in some outdated guides. On the £1,680 example above, that's an additional £252.00 employer cost in 2026/27. Fleets running salary sacrifice EV schemes should recalculate net pay deductions each April as the BIK percentage steps up, since take-home pay changes even if the lease cost stays flat.
Other 2026 Changes Affecting Company EV Costs
- VED (road tax): the standard rate rises in line with RPI from 1 April 2026 — £195 to £200 a year for cars registered after April 2017.
- Expensive Car Supplement threshold: raised from £40,000 to £50,000, meaning most mid-range EVs now avoid the extra £425 annual "luxury car" surcharge that used to catch many company EVs.
- Pay-per-mile EV tax: the government has confirmed plans for a distance-based charge on electric vehicles (including PHEVs) from 2028 — not yet in effect, but worth factoring into any lease running past that date.
Key Takeaway for Fleet Decision-Makers
With rates rising only 1 percentage point a year until 2028/29, EVs remain dramatically cheaper than combustion alternatives for company car tax purposes throughout this period. Businesses ordering vehicles in 2026 should factor the known 2027/28 (5%) and 2028/29 (7%) rates into three-to-four-year lease agreements to avoid mid-contract tax surprises.