How much BIK tax do electric company cars attract?

A fully electric company car has a 4% benefit-in-kind percentage in the 2026/27 tax year [S1]. That percentage determines the taxable benefit, not your employee's tax bill. Apply the employee's relevant income tax rate to the benefit and budget separately for employer National Insurance, vehicle costs and charging. Check the calculation with your accountant. Checked October 2026.

Last checked 17 October 2026

Do you pay tax on an electric company car?

Electric propulsion does not make a company car tax-free. GOV.UK says a car provided for private use, including commuting, can create a taxable benefit [S3]. Establish the arrangement first: who supplies the car, who can use it and when it is available. Check with your accountant rather than applying a headline electric-car percentage to every vehicle arrangement.

Benefit in kind (BIK) means the taxable value of a non-cash employment benefit. The company car calculation creates a value to tax; it is not the same as a vehicle lease payment. When explaining an offer to staff, show the salary deduction, if any, separately from the tax on the benefit.

For your business, keep separate records for the vehicle agreement, payroll calculation and charging policy. The fleet ownership-cost guide provides a wider comparison brief. This page explains the rules and illustrative arithmetic, not a recommendation about how you should fund a car.

What are electric company car BIK rates through 2030?

Use the rate for the tax year concerned. The table applies to zero-emission cars, not every vehicle marketed as electric. HMRC’s table and policy paper cover the earlier years [S1] [S8]; its later policy paper sets out the increases for the following years [S2]. Check with your accountant before fixing a multi-year payroll forecast.

Ask for a year-by-year schedule over the car agreement. A quote showing only today’s tax effect does not show the effect of later percentages. Do not copy a pure-electric rate into a plug-in hybrid calculation; ask payroll to use the vehicle’s documented emissions and relevant electric range [S1]. Check with your accountant.

How do you calculate the tax on an electric company car?

The broad method is taxable list price including relevant accessories × appropriate percentage = annual taxable benefit. Apply the employee’s applicable income tax rate to that benefit [S2] [S3]. Check adjustments for the actual arrangement with your accountant, including any period when the car was unavailable or qualifying contributions.

An illustration, not a quote: assume an agreed taxable list price of £40,000, a full year’s availability and no adjustments. The following amounts apply the published 2026/27 percentage [S1]. The employee tax rates are assumed comparison inputs, not a full assessment of anyone’s tax position.

These monthly equivalents help explain the arithmetic. They are not a payslip forecast. Ask payroll to use the employee’s actual circumstances, including Scottish income tax where applicable and any interaction with other income or allowances. Check with your accountant.

Request the underlying taxable price rather than using the invoice total or monthly rental. If a used car is being considered, check its original list-price record: the Treasury has specifically addressed that basis for used electric company cars [S7]. A discounted purchase price does not establish the benefit value.

What does the employer pay alongside BIK?

The employer’s vehicle budget includes the purchase or rental arrangement, insurance, maintenance, administration and charging commitments you agree. Collect those figures from the actual proposal. Do not describe the employee’s tax bill as the total cost to your company.

Class 1A National Insurance on expenses and benefits is 15% for 2026/27 [S4]. In the same assumed example, the employer charge would be £1,600 × 15% = £240 for the year, before any arrangement-specific adjustment. This illustration uses the benefit value above; check the liability and reporting with your accountant.

For salary sacrifice, ask payroll for the separate changes in cash salary, employer contributions and benefit charges. The normal car benefit calculation remains relevant for qualifying low-emission cars under the optional remuneration exception [S5]. Read the employer salary sacrifice guide for the implementation questions.

How should you handle charging costs and workplace chargers?

Write down which electricity your business will provide or reimburse. HMRC’s electric-car guidance distinguishes company cars from employees’ own cars and explains charging-specific treatment [S6]. Ask your accountant to check the matching arrangement before payroll processes a payment. Do not infer a reimbursement rule from the BIK rate.

For your site, survey the existing supply and the hours cars are present. Keep charger capital costs, electricity and operating fees in a separate budget. Use the staff charging tax guide and the workplace charging policy to prepare the brief.

What should you do next?

Ask payroll for a checked vehicle-benefit calculation and ask your site manager for the charging requirement. Keep both in the decision pack so staff can see the car cost and charging arrangements clearly.

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