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.

Our view at The Electric Car Scheme is that the EV transition will take longer than the current plan assumes, and that the most cost-effective thing the Treasury can do to speed it up is not a new grant. It is to extend the visibility on company car tax that has served the market so well. This article sets out 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 in advance, and they rise in small steps. That is the design working as intended: an employee can see the whole cost of a term before signing anything.

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%. Even in 2029/30, at the highest rate currently published, an electric car is taxed at well under a third of that. The saving available through salary sacrifice on an electric car remains between 20% and 50% of the gross cost depending on the driver's tax band, and nothing in the published schedule changes that.

The direction of travel has also been consistent. EV salary sacrifice has come through every fiscal event of recent years intact, including the commitment that secured it to 2030 and the Spring Statement 2026, which left the scheme untouched. Successive governments have treated it as one of the more efficient levers they have, and the employee tax savings it produces are the reason 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, and it sits a little below the 33% the ZEV mandate anticipates for the full year.

That modest gap is the backdrop to the current policy conversation. The Department for Transport opened a consultation on the ZEV mandate in August 2026, brought forward from a planned 2027 review, and the Society of Motor Manufacturers and Traders has argued that annual targets are running ahead of consumer demand. Some responses have suggested a 2030 target closer to 50-60% of sales rather than 80%. Our expectation is that the 2030 phase-out date moves to 2035, and fleets planning around the 2030 petrol and diesel phase-out should watch that consultation closely.

Our reading is that adjusting the targets is the less useful half of the answer. Targets tell manufacturers what to build. Tax rates tell a driver what an electric car will cost them over the length of a contract, and that is the lever with the most direct effect on demand.

Extending visibility beyond 2029/30

Every year to 2029/30 is published. The opportunity at this Budget is to go further.

Employees can take agreements of up to four years through our scheme. For a driver ordering now, with delivery in 2027, three of those four 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 a stronger one.

This is why our central ask is for the low-rate policy to be extended to at least 2035, aligned with wherever the phase-out date eventually settles. Long-term schedules are what allow employers to build salary sacrifice into a benefits package for the next decade rather than the next parliament.

Our policy position: 5% until 2035

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, and 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. Holding at 5% is worth around £640 a year to that driver in the later years of a term, on top of the savings on the lease itself. For a comparable petrol car at 29%, the same taxpayer would be paying £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.

A lower rate for used electric cars

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

With used EV supply now arriving in volume, a band that reflects 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 it would work for 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 to see 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 available to them. There has been movement already: 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, and its published position remains that public charging is standard-rated, 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

The Treasury has receipts to raise, and EV drivers are already contributing more than they were. 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 view is that this is the right moment to look elsewhere for additional revenue rather than adding further to the EV column.

Two areas stand out. Fuel duty went untouched from 2011 until this year, and the 5p cut introduced in 2022 is now unwinding: 52.95p per litre rose by 1p on 1 September 2026, with 2p in December, 2p in March 2027, and annual RPI uprating resuming from April 2027. We think that is the right direction and it should hold. Aviation is the larger opportunity, since kerosene used in commercial aviation is untaxed and tickets carry no VAT. Transport & Environment put the resulting UK revenue shortfall at £4.7bn in 2022. Both raise money without asking a driver to revisit a decision they have already made.

Extending salary sacrifice beyond the car

Our final ask is the most expansive one. Salary sacrifice has brought electric cars within reach of workforces that the retail market was never going to serve, and it does so at zero set-up cost to the employer. Holland & Barrett, Leeds Bradford Airport and TopCashback are among the employers running it as a standard benefit.

The same mechanism suits rooftop solar, home battery storage and heat pumps. These are large upfront purchases with long payback periods, which is exactly the problem salary sacrifice solves, and 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 is changing before 28 October, and an agreement signed today is priced on rates that are already law. BiK on pure EVs is 4% for 2026/27 and 5% for 2027/28, with the schedule published to 2029/30.

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, which addresses where most of the perceived risk sits. For employees, our multi-funder pricing engine quotes across several UK leasing partners rather than a single funder, so it is worth looking at 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, 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 for an employee to drive a new or used electric car, and the savings sit at 20-50% depending on tax band.

What the Autumn Budget 2026 can add is length. 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.

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