What Are the UK EV Benefit-in-Kind Rates for 2026 to 2028?
UK company car tax on electric vehicles rises from 3% in 2025/26 to 4% in 2026/27 and 5% in 2027/28, under HMRC's confirmed Benefit-in-Kind schedule, before increasing further to 7% in 2028/29 and 9% in 2029/30, calculated against a vehicle's P11D value and the driver's income tax band.
These rates were locked in via the 2024 Spring Budget's extension of the original 2022 BIK trajectory, giving fleet managers and salary sacrifice scheme operators a fixed five-year 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 single cheapest company car option through the entire 2026–2028 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 at 13.8% on the same taxable benefit figure, meaning the £1,680 example above costs the employer an additional £231.84 in 2026/27. Fleets running salary sacrifice EV schemes should recalculate net pay deductions each April as the percentage step-up takes effect, since take-home pay changes even if the lease cost stays flat.
Key Takeaway for Fleet Decision-Makers
With rates rising only 1 percentage point per 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.