EV Benefit-in-Kind (BiK) Tax Rates 2024-2028
Complete breakdown of electric vehicle BiK tax rates and what they mean for salary sacrifice.
EV BiK Tax Rates: 2024-2028
Understanding Benefit-in-Kind (BiK) tax is crucial for calculating your EV salary sacrifice savings.
Current BiK Rates
| Year | EV BiK Rate | Petrol/Diesel (average) |
|---|---|---|
| 2024/25 | 2% | 30-37% |
| 2025/26 | 3% | 31-38% |
| 2026/27 | 4% | 32-39% |
| 2027/28 | 5% | 33-40% |
How BiK Tax is Calculated
BiK tax = P11D value × BiK rate × your income tax rate
Example:
- Tesla Model 3 P11D: £44,990
- BiK rate 2024/25: 2%
- Your tax rate: 40%
Annual BiK tax: £44,990 × 0.02 × 0.40 = £359.92
Monthly: £30
Compare this to a £45k petrol car at 30% BiK:
Annual BiK tax: £45,000 × 0.30 × 0.40 = £5,400
Monthly: £450
Why EVs Are So Tax-Efficient
The government set ultra-low BiK rates to encourage EV adoption:
- Environmental policy: Incentivize zero-emission vehicles
- Locked until 2028: Provides certainty for planning
- Massive savings: 90%+ less BiK tax than combustion vehicles
Impact on Salary Sacrifice
The low BiK rate is what makes EV salary sacrifice so attractive:
- Save income tax and NI on the gross amount
- Only pay tiny BiK tax on the benefit
- Net result: 30-60% cheaper than personal leasing
Planning Ahead
Even with BiK rising to 5% by 2027/28, EVs will still be:
- Far cheaper than petrol/diesel company cars
- More tax-efficient than most other benefits
- The best option for salary sacrifice
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