Key Insights

Benefit-in-Kind on pure electric cars is confirmed at 4% for the 2026/27 tax year and legislated year by year through to 9% in 2029/30, so agreements signed today are priced against published rates.
Even at the top of that published range, an electric car attracts roughly a third of the company car tax of a typical petrol equivalent, which sits near 29% in 2026/27.
The Electric Car Scheme is asking the Chancellor to hold the rate at a flat 5% until at least 2035, extending the visibility drivers and employers already have.
Battery electric cars took a record 29.8% of the UK new car market in August 2026, and employees continue to save 20-50% through salary sacrifice.

The Autumn Budget 2026 will be delivered on Wednesday 28 October by Chancellor John Healey. For anyone running or joining an electric car salary sacrifice scheme, the good news is that the position going into it is settled. The 4% Benefit-in-Kind rate on pure EVs for 2026/27 is legislated, as is every year through to 2029/30. Use our Bik Rate calculator to see how much you’d pay.

Successive governments have given this market more forward visibility on tax than almost any other area of personal taxation, and the results show in the registration figures. Our view is that the transition will take time, and that the most cost-effective thing the Treasury can do to support it is to keep doing what has already worked: extend that visibility a little further out. Here is what is already confirmed, and what we are asking for on 28 October.

What is already confirmed

The published BiK table for pure electric cars runs 4% in 2026/27, 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30. Those rates are in legislation, announced years ahead, and they rise in small steps. That is the design working as intended: an employee sees the whole cost of a term before signing.

It is worth keeping the scale in view. A typical petrol company car sits at around 29% in 2026/27 and the top band reaches 37%, so even at the highest rate currently published an electric car is taxed at well under a third of that. The saving through salary sacrifice on an electric car remains 20-50% of the gross cost depending on tax band, and nothing in the published schedule changes that.

The direction of travel has been consistent too. EV salary sacrifice has come through every recent fiscal event intact, including the commitment that secured it to 2030 and the Spring Statement 2026, and the employee tax savings it produces are why.

The transition is moving, and pace matters ‍

Battery electric cars reached 29.8% of the UK new car market in August 2026, a record for the month, out of 94,236 registrations. That is genuine momentum, sitting a little below the 33% the ZEV mandate anticipates for the full year.

That modest gap is the backdrop to a constructive policy conversation. The Department for Transport opened a consultation on the ZEV mandate in August 2026, bringing it forward from a planned 2027 review, and we think that was the right call: giving manufacturers an early say on the trajectory is exactly the evidence-led approach the industry asked for. The Society of Motor Manufacturers and Traders has set out where it believes annual targets run ahead of consumer demand, and some responses suggest a 2030 figure nearer 50-60% of sales than 80%. Wherever the review lands, the timetable may be re-profiled towards 2035, so fleets planning around the 2030 petrol and diesel phase-out will want to follow it closely.

Targets and tax policy work together, and the review is the right place to settle the first. Targets tell manufacturers what to build; tax rates tell a driver what an electric car will cost across a contract, and that is the lever the Government has already used to great effect. Extending it is the simplest way to make the trajectory achievable, whichever date the review settles on.

Our policy position: 5% until 2035

Every year to 2029/30 is published, and the opportunity at this Budget is to go further. Employees can take agreements of up to four years through our scheme, so for a driver ordering now with delivery in 2027, three of those years already sit inside the published table and the fourth falls just beyond it. That is a solid position, and a longer schedule would make it stronger.

Long-term schedules are what allow employers to build salary sacrifice into a benefits package for the next decade rather than the next parliament, so we are asking the Chancellor to do three things on 28 October. First, extend the low BiK policy for pure electric cars to at least 2035. Second, set it at a flat 5% across that period. The 5% figure is already legislated for 2027/28, so this is a continuation rather than a new concession: it holds the rate steady instead of stepping up to 7% and then 9%. Third, publish it as a single schedule, so a four-year agreement signed in 2026 is fully priced from day one.

The household case is easy to see. Take a £40,000 electric car. At the 4% rate for 2026/27 the taxable benefit is £1,600, so a 40% taxpayer pays £640 in company car tax for the year. Held at 5% that becomes £800, against £1,440 if the rate reaches 9% in 2029/30. A comparable petrol car at 29% would cost the same taxpayer £4,640. The electric option is strongly advantageous today and stays that way across every published rate. Our ask is about making the later years better still.

Thom Groot, CEO and co-founder of The Electric Car Scheme, said the Government deserves credit for the roadmap it has already built:

"Before the Autumn Statement of 2024, nobody knew whether Benefit-in-Kind would stay at 2% or jump to 25%. Since then we have had a clearly signposted rate every year out to 2029/30, and that certainty is the biggest single reason EV salary sacrifice has grown the way it has. Ministers got that call right.
What we are asking for on 28 October is more of the same, not something different. Hold the rate at 5% through to 2035 and an employee signing a four-year agreement in 2027 knows their tax position for every month of it. That is worth more to a household than any grant, it costs the Treasury little by comparison, and it is the most reliable way to make the trajectory achievable. The policy is working. Our case is to let it run longer."

A lower rate for used electric cars‍ ‍

A second refinement is worth making in the same Budget. Company car tax is calculated on the P11D list price when new rather than current value, so a three-year-old EV changing hands at £18,000 is taxed on its original £40,000 figure.

With used supply now arriving in volume, a band reflecting the value of the car at the point it enters the scheme would open the most affordable route to more drivers. Used electric car salary sacrifice already works well through our scheme, with delivery inside 14 days, and would reach more people still with the tax basis brought into line.

Bringing public charging into line

Public charge points carry VAT at 20%. Domestic electricity is normally reduced-rated at 5%, and from 1 October 2026 to 31 March 2027 it is temporarily zero-rated. Whether that zero rate continues past March 2027 is a decision for this Budget, and we would like the public rate brought closer to the domestic one at the same time.

The case is a fairness one, since drivers without a driveway have no domestic option, and the temporary zero rate shows the Government is already alert to household electricity costs. There has been movement on the public side too: a First-tier Tribunal ruled in March 2026 that public charging can qualify for the 5% rate under de minimis rules below 1,000kWh a month. HMRC is appealing, so legislating the reduced rate would settle the question more cleanly than litigation. In the meantime, The Charge Scheme lets employees put home, workplace and public charging through salary sacrifice, recovering 20-50% of the cost wherever they plug in.‍ ‍

Where new revenue could come from

We recognise the fiscal position the Chancellor is working within, and that fuel duty receipts decline as the fleet electrifies. That is a real problem needing a real answer, and EV drivers are already contributing towards it: the pay-per-mile charge for electric vehicles is confirmed from 2028, and our pay-per-mile tax calculator shows what that looks like at a typical mileage. Our suggestion is simply that the next tranche of revenue is easier to find elsewhere.‍ ‍

Two areas stand out. On fuel duty the Government has already taken the difficult decision: the 5p cut from 2022 is unwinding, with 52.95p per litre rising 1p on 1 September 2026, 2p in December, 2p in March 2027, then RPI uprating from April 2027. That took some doing after fourteen years of freezes, and we support it. Aviation is the larger remaining opportunity, since kerosene used in commercial aviation is untaxed and tickets carry no VAT. Transport & Environment put the resulting UK shortfall at £4.7bn in 2022. Both raise money without asking a driver to revisit a decision already made.

Extending salary sacrifice beyond the car

Our final ask is the most expansive. Salary sacrifice has brought electric cars within reach of workforces the retail market was never going to serve, at zero set-up cost to the employer, and Holland & Barrett, Leeds Bradford Airport and TopCashback are among those running it as a standard benefit. The same mechanism suits rooftop solar, home battery storage and heat pumps: large upfront purchases with long payback periods, which is exactly the problem salary sacrifice solves. The National Insurance savings that make the model work for cars apply equally to home energy. Widening the scope at this Budget would put the home on the same footing as the drive.

What employers and employees can do now

Nothing changes before 28 October, and an agreement signed today is priced on rates already in law. For employers the practical case is unchanged: no set-up cost, and Complete Employer Protection from day 1 covering resignation, redundancy, illness and parental leave with no exclusion period. For employees, our multi-funder pricing engine quotes across several UK leasing partners rather than a single funder, so it is worth reviewing the best EV deals available now alongside our EV salary sacrifice comparison.

The bottom line

The foundations are in place. Benefit-in-Kind on electric cars is 4% for 2026/27 and legislated through to 2029/30, and even at the top of that range an EV is taxed at a small fraction of a petrol equivalent. Salary sacrifice remains one of the most effective ways to drive a new or used electric car, with savings of 20-50% depending on tax band.

That foundation is the product of a decade of consistent policy, and the Autumn Budget 2026 is a chance to build on it. Holding BiK at 5% to 2035, introducing a lower band for used EVs, bringing public charging VAT into line and widening salary sacrifice to home energy would give the market a decade of visibility, funded from fuel duty and aviation rather than from EV drivers. We will publish a full analysis on 28 October.

Get an instant quote to see what an electric car costs through salary sacrifice at your tax rate, or read how salary sacrifice works for companies if you are considering it as an employee benefit.

Benefit-in-Kind (BiK) Calculator

Electric Car BiK Tax Calculator 2026–2030 | The Electric Car Scheme

What will rising Benefit-in-Kind actually cost you?

Electric company car tax is set to rise from 4% to 9% by 2029/30. The rates are already published, so there are no surprises — and even at 9%, an electric car is taxed at a fraction of the petrol equivalent. See what it means for you.

Your details

Where you pay tax

Your income tax rate

The electric car

List price (P11D value)

£

Manufacturer’s list price including VAT, delivery and options.

Compare against

Equivalent non-electric car

Assumes the same list price, so you’re comparing like for like.

Your electric car BiK tax this year (2026/27)

£60/month

Rising to £135/month by 2029/30 — an increase of £75 a month, phased in over four years.

The petrol/diesel equivalent costs £495/month today

EV tax, 4 years

£4,500

2026/27 to 2029/30 total

Non-EV tax, 4 years

£25,200

Petrol/diesel, approx. 135 g/km

You keep

£20,700

Even after every announced rise

Monthly BiK tax, year by year

Electric car Petrol/diesel equivalent

The full picture

Tax year	EV rate	EV tax	Non-EV rate	Non-EV tax	Difference

How this is worked out. BiK tax = list price (P11D) × the BiK percentage for that tax year × your income tax rate. Zero-emission BiK rates are those confirmed by HM Treasury: 4% in 2026/27, 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30. Petrol and diesel rates rise by 1 percentage point in 2027/28, 2 points in 2028/29 and 1 point in 2029/30, capped at 37%, 38% and 39% respectively. All cars emitting 1–50 g/km, including plug-in hybrids, move to 18% in 2028/29 and 19% in 2029/30 regardless of electric range. Figures assume the same list price for both cars and exclude the 4 percentage point surcharge on diesels that do not meet the RDE2 standard. This is an illustration, not tax advice — your own figures depend on your salary, tax code and the exact vehicle.

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