BiK company car tax for electric vehicles: how it works

When your employer provides a car you can also use privately, HMRC taxes you on a percentage of the car's list price — the Benefit-in-Kind (BiK). The percentage varies by fuel type and CO2 emissions.

BiK rates for electric vehicles

For zero-emission electric cars, the BiK rate was 2% in 2023–24 and 2024–25, rising to 3% in 2025–26, 4% in 2026–27, and 5% in 2027–28. This compares with 25–37% for high-emission petrol and diesel cars. The difference is substantial once you do the maths.

How the tax is calculated

Your annual BiK charge = list price × BiK rate. So a £45,000 electric car at 3% produces a £1,350 annual taxable benefit. A 20% taxpayer pays £270/year in extra income tax. A 40% taxpayer pays £540/year. On a comparable petrol car worth £45,000 at a 30% BiK rate, that same 40% taxpayer would pay £5,400/year — ten times more.

What 'list price' means for BiK

HMRC uses the manufacturer's P11D value — the list price including delivery, VAT and any accessories, but excluding road tax (VED) and the first registration fee. Employer-negotiated discounts do not reduce the P11D value, so the tax base is fixed.

Company directors

Directors who provide themselves with a company car follow the same BiK rules. For owner-managers, the comparison is often between a company-purchased EV on low BiK versus drawing the money as salary and buying personally. The low BiK rate often tips the calculation in favour of a company car for electric vehicles.

Beyond 2027–28

The government has confirmed BiK rates through 2029–30. Rates continue to rise modestly but remain far below equivalent petrol vehicles. Planning a three-year lease? The tax position is predictable for the full contract term.

Not sure whether a company EV works for your tax situation? A quick question on WhatsApp gets you a plain-English answer.