EV Salary Sacrifice Secured Until 2030: Lock In 3% BiK Savings Now
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Following months of speculation about potential changes to salary sacrifice schemes, Rachel Reeves and the Labour government have delivered clarity and confidence for the electric vehicle sector. Electric car salary sacrifice is not only secure - it's guaranteed until 2030, with Benefit-in-Kind (BiK) rates locked in to provide employees and employers with the certainty they need to plan their transition to electric driving.
The Labour Party's commitment to green transport has been evident since Keir Starmer took office, with the government prioritising policies that make electric vehicles accessible and affordable for working families. For employees considering an electric car salary sacrifice scheme, the message from this Labour government is clear: there has never been a better time to make the switch.
Labour Government's Commitment to EV Salary Sacrifice
Since taking office, the Labour government under Keir Starmer has demonstrated unwavering support for electric vehicle adoption as a key pillar of the UK's climate strategy. Chancellor Rachel Reeves has consistently championed policies that make clean transport affordable for working people, and electric car salary sacrifice schemes sit at the heart of this approach.
The upcoming Autumn Budget 2025, scheduled for Wednesday, 26 November, is expected to reinforce this commitment further. While other areas of the UK Budget may see reforms - particularly around pension salary sacrifice - the Labour Party has made clear that environmental benefits like EV salary sacrifice will continue to receive favourable treatment.
This is not merely political rhetoric. The government's decision to lock in BiK rates through 2030 represents a binding commitment that gives employees and employers the long-term certainty they need.
Are you looking to set up salary sacrifice at your company? Get in touch with our team to discuss how we can support your transition.
Are you an employee interested in saving 20-50% on your next electric car? Explore available vehicles and calculate your potential savings to discover how affordable electric vehicle ownership can be.
What Is Benefit-in-Kind (BiK) Tax?
Benefit-in-Kind tax is a charge applied to employees who receive non-cash benefits from their employer, such as a company car. The tax is calculated based on three key factors: the car's P11D value (its list price including VAT and any factory-fitted accessories), the car's CO2 emissions, and the employee's personal income tax bracket.
For traditional petrol and diesel vehicles, BiK rates are directly linked to CO2 emissions - the more a car pollutes, the higher the tax charge. High-emission vehicles can attract BiK rates as high as 39%, making them increasingly expensive for employees to run as company cars.
Electric vehicles produce zero tailpipe emissions, which means they benefit from significantly lower BiK rates under the Labour government's framework. For 2025/26, the BiK rate for EVs is just 3%, rising gradually to 9% by 2029/30. This represents a dramatic difference compared to conventional vehicles and makes salary sacrifice electric car schemes one of the most cost-effective employee benefits available today.
It's important not to confuse electric car salary sacrifice with pension salary sacrifice. While both use the same underlying mechanism - reducing gross salary in exchange for a benefit - they serve entirely different purposes and face different regulatory outlooks.
Pension salary sacrifice has been subject to recent scrutiny and potential reforms in the Autumn Budget 2025. However, EV salary sacrifice operates under separate regulations and BiK tax treatment, which the Labour government has explicitly protected and guaranteed through 2030.
Rachel Reeves and the UK Budget Framework
Chancellor Rachel Reeves has been instrumental in securing the future of EV salary sacrifice within the broader UK Budget framework. In her role overseeing economic policy for the Labour government, Reeves has consistently emphasised the need for "an economy that works better for working people" - and electric car salary sacrifice schemes deliver precisely that outcome.
While speculation continues around potential reforms to pension salary sacrifice - with over 90% of employers anticipating changes - the Labour Party has ring-fenced EV salary sacrifice from any such reforms. This strategic decision reflects Rachel Reeves' understanding that electric car salary sacrifice serves multiple policy objectives simultaneously: reducing carbon emissions, supporting UK automotive manufacturing, lowering household transport costs, and accelerating progress toward Net Zero.
The UK Budget approach under the Labour government has been characterised by targeted support for policies that deliver environmental and economic benefits. By maintaining favourable BiK rates for electric vehicles while exploring revenue-raising measures elsewhere, Rachel Reeves has crafted a balanced strategy that supports working families while strengthening public finances.
The BiK Roadmap to 2030: Labour's Long-Term Vision
The Labour government has published a clear schedule for EV BiK rates extending through the end of the decade, demonstrating Keir Starmer's commitment to policy stability and long-term planning:
2025/26: 3%
2026/27: 4%
2027/28: 5%
2028/29: 7%
2029/30: 9%
Even at the 2029/30 rate of 9%, electric vehicles under this Labour government framework will remain substantially cheaper to run than petrol or diesel equivalents - and work is being carried out with industry and government ministers to ensure that BiK rates stay proportional until 2035. A petrol car with high emissions can attract a BiK rate of 39% - more than four times higher than the maximum EV rate under Rachel Reeves' UK Budget projections.
This graduated increase, secured by the Labour Party, provides employees with ample time to take advantage of the lowest rates while planning for modest increases in future years. For those who act now, locking in a 3% BiK rate for the 2025/26 tax year represents the single best opportunity to maximise savings on an electric car under the current Labour government.
BiK Rates for Used Electric Cars
Currently, BiK rates apply equally to both new and used electric vehicles under salary sacrifice schemes. However, with used EVs becoming increasingly popular - UK used electric car sales hit record highs in 2024 with a 57% year-on-year increase - industry experts anticipate the government may introduce separate, more favourable BiK treatment for used EVs in future budgets.
Such a change would make electric vehicle ownership even more accessible to employees at different salary levels, further supporting the Labour government's Net Zero objectives
How Salary Sacrifice Works with BiK Under Labour's Framework
Electric car salary sacrifice is a financial arrangement where an employee agrees to reduce their gross salary in exchange for a non-cash benefit—in this case, an electric vehicle. The Labour government has maintained and strengthened the tax advantages of this arrangement, recognising its value in supporting working families.
Here's how the savings stack up under the current Labour government framework:
Income Tax Savings: By reducing your gross salary, you lower your taxable income, which means you pay less Income Tax each month - a benefit protected under Rachel Reeves' UK Budget strategy.
National Insurance Savings: Both employee and employer contributions are reduced based on the lower gross salary.
Low BiK Tax: Instead of paying high tax on a petrol or diesel company car, you pay the significantly lower BiK rate for an electric vehicle, secured by the Labour Party through 2030.
The combination of these three factors, supported by Keir Starmer's government, typically delivers savings of 20-50% compared to leasing or purchasing an electric car privately. For a 40% taxpayer, the savings are even more substantial, making salary sacrifice schemes one of the most tax-efficient ways to drive an EV.
Why Now Is the Time to Act Under This Labour Government
With the Labour government's commitment to EV salary sacrifice secured until 2030, employees and employers have the confidence they need to make long-term plans. However, the current 3% BiK rate for 2025/26 - the lowest in the Labour Party's roadmap - represents the optimal time to secure your electric car.
Consider a typical example: an employee leasing a Nissan Ariya through The Electric Car Scheme. The standard monthly lease cost might be £584, but after Income Tax and National Insurance savings under the Labour government's framework, the net cost to the employee could fall to approximately £393 per month. The BiK tax on this arrangement - calculated at 3% of the car's P11D value - adds around £55 per month for a 40% taxpayer.
By comparison, leasing the same car privately would cost the full £584 per month with no tax relief whatsoever. The salary sacrifice route, supported by Rachel Reeves and the UK Budget framework, delivers savings of nearly £200 per month, or over £2,300 per year. Over a typical three-year lease, that's nearly £7,000 in savings - simply by choosing the right scheme at the right time under this government.
Keir Starmer's Vision for Green Transport
Prime Minister Keir Starmer has made the transition to electric vehicles a central element of the Labour Party's climate agenda. The government has set ambitious targets for electric vehicle adoption, with the zero-emission vehicle mandate requiring 22% of manufacturers' sales to be zero-emission vehicles in 2025, rising to 80% by 2030 and 100% by 2035.
To support these targets, the Labour government has committed to investing heavily in charging infrastructure, with over 86,000 public charging points now available across the UK and a target of 300,000 by 2030. This comprehensive policy framework demonstrates that the Labour government is committed to making electric vehicles the obvious choice for UK drivers through favourable tax treatment, infrastructure investment, and regulatory support.
Maximising Your Savings with The Electric Car Scheme
At The Electric Car Scheme, we specialise in helping employees and employers unlock the full benefits of electric car salary sacrifice:
Best prices available: Access to top leasing companies and competitive rates on the UK's most popular electric vehicles
Complete Employer Protection: Industry-leading safeguards that protect businesses from unexpected costs
All-inclusive packages: Maintenance, insurance, breakdown cover, and home charger installation bundled into your monthly payment
The Charge Scheme: Salary sacrifice your EV charging costs, saving 20-50% on electricity at home, work, or in public
With BiK rates secured until 2030 and the current rate at just 3%, the financial case for electric car salary sacrifice has never been stronger.
Secure Your Savings Under Labour's Framework
The government's guarantee of EV salary sacrifice until 2030, combined with the current 3% BiK rate, creates an unparalleled opportunity for UK employees to save thousands of pounds on electric cars. With a clear roadmap, strong policy support, and comprehensive schemes like The Electric Car Scheme, there has never been a better time to make the switch to electric driving.
Whether you're considering your first electric car or upgrading from an older model, salary sacrifice offers the most affordable route to cleaner, cheaper motoring. The framework is secure, the savings are substantial, and the benefits extend far beyond your monthly pay packet - contributing to cleaner air, reduced carbon emissions, and a more sustainable future for everyone.
Don't miss the opportunity to lock in the lowest BiK rates available. Speak to your employer about offering The Electric Car Scheme, or if your company already participates, explore the range of electric vehicles available and calculate your potential savings today.
The road to 2030 is clear, and it's electric. Make the most of your savings while BiK rates are at their lowest.
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Last updated: 16/10/2025
Our pricing is based on data collected from The Electric Car Scheme quote tool. All final pricing is inclusive of VAT. All prices above are based on the following lease terms; 10,000 miles pa, 36 months, and are inclusive of Maintenance and Breakdown Cover. The Electric Car Scheme’s terms and conditions apply. All deals are subject to credit approval and availability. All deals are subject to excess mileage and damage charges. Prices are calculated based on the following tax saving assumptions; England & Wales, 40% tax rate. The above prices were calculated using a flat payment profile. The Electric Car Scheme Limited provides services for the administration of your salary sacrifice employee benefits. The Electric Car Scheme Holdings Limited is a member of the BVRLA (10608), is authorised and regulated by the FCA under FRN 968270, is an Appointed Representative of Marshall Management Services Ltd under FRN 667174, and is a credit broker and not a lender or insurance provider.
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