Electric Vehicle Benefit in Kind
UK tax glossary · Last reviewed: April 2026
Company electric vehicles (EVs) have an exceptionally low benefit in kind rate of 3% in 2025/26, rising by 1 percentage point per year to 7% in 2029/30. Compared to a typical petrol car at 25–37% BiK, the tax saving for employees in company EVs can be substantial.
The BiK charge is calculated as: P11D value × BiK rate × your marginal tax rate. An EV with a list price of £50,000 at 3% BiK generates a taxable benefit of £1,500. A basic-rate taxpayer owes £300/year in tax; a higher-rate taxpayer owes £600/year.
Employers also pay Class 1A NI at 15% on the BiK value. For low-BiK EVs, this is far less than on petrol equivalents. Company EV charging at workplace is another benefit that HMRC currently exempts from BiK entirely.
Worked example
Company EV list price: £45,000. BiK rate 2026/27: 4%. Taxable benefit: £1,800. Higher-rate employee's tax: £1,800 × 40% = £720/year (£60/month). Compare with a petrol car at the same price at 30% BiK: £13,500 taxable, £5,400 tax/year.
Common questions
Is home charging reimbursement for a company EV tax-free?
If your employer installs a charger at your home for business use, the cost is exempt from BiK. Mileage reimbursement for home charging can be claimed at HMRC's Advisory Electricity Rate (currently 7p/mile).
Does the low EV BiK rate apply to plug-in hybrids?
Plug-in hybrid vehicles have higher BiK rates than pure EVs, based on their CO₂ emissions and electric range. Only vehicles with zero CO₂ emissions qualify for the 3–7% EV rates.
Related resources
TaxHelper provides general information based on published HMRC rates and guidance. It is not regulated financial or tax advice. For decisions involving significant sums, complex circumstances, or if you are unsure, speak to a qualified accountant or HMRC directly.