UK EV Salary Sacrifice (2026/27)
UK electric car salary sacrifice in 2026/27: a 4% benefit-in-kind rate, what you save in each tax band, and the rates to 2029/30.
Net cost by tax band (2026/27)
Illustrative figures for an employee in England, Wales or Northern Ireland, using the listed annual sacrifice and list price. Net cost = sacrifice - Income Tax and NI saved + tax on the benefit. "Effective saving" is the share of the sacrifice you save. Scottish rates differ; NI is the same.
| Tax band | Annual sacrifice | EV list price | BIK tax | Net cost | Effective saving |
|---|---|---|---|---|---|
| Basic rate (£12,571 - £50,270) | £8,000 | £35,000 | £280 | £6,040 | 25% |
| Higher rate (£50,271 - £100,000) | £12,000 | £50,000 | £800 | £7,760 | 35% |
| Allowance taper (£100,001 - £125,140) | £15,000 | £60,000 | £1,440 | £7,140 | 52% |
| Additional rate (above £125,140) | £18,000 | £75,000 | £1,350 | £10,890 | 40% |
BIK rate staircase
| Tax year | Zero-emission BIK rate |
|---|---|
| 2025/26 | 3% |
| 2026/27 | 4% |
| 2027/28 | 5% |
| 2028/29 | 7% |
| 2029/30 | 9% |
2025/26 and 2026/27 from HMRC 480 Appendix 2; 2028/29 and 2029/30 from the HMRC policy paper announced at Autumn Budget 2024, which raises the rate by 2 points a year to 9%. No rate has been set here for later years.
Related
Frequently asked questions
How does EV salary sacrifice work?
An employee gives up part of their gross salary in exchange for the use of an electric company car. The sacrificed amount is not paid as salary, so no Income Tax or employee National Insurance is due on it. Instead, the employee pays Income Tax (only) on a benefit-in-kind charge of 4% of the car's list price in 2026/27, and the employer pays Class 1A NI at 15% on the same amount. A sacrifice cannot take cash pay below the National Minimum Wage.
Why is EV BIK so low?
Company car tax is set by CO2 emissions. In 2026/27 a zero-emission car is at 4%; plug-in hybrids with 1-50 g/km run from 4% to 16% depending on electric range, and petrol cars from 17% at 51-54 g/km up to the 37% maximum (HMRC 480 Appendix 2).
Is EV salary sacrifice better for higher-rate taxpayers?
Yes - the saving rises with the marginal rate. A basic-rate taxpayer saves 28% (Income Tax + NI) on the sacrificed salary, a higher-rate taxpayer 42%, and someone in the £100,000 to £125,140 allowance taper 62%. The tax on the benefit is 4% of list price at the same marginal rate. In the examples on this page the net saving is 25% of the sacrifice for the basic-rate case and 35% for the higher-rate case.
What happens to my pension contribution?
If your pension contribution is a percentage of salary, it may be worked out on the salary after the car sacrifice, which lowers it: at 5%, sacrificing £8,000 a year reduces the contribution by £400. Some employers keep the pre-sacrifice salary as the pension base (a reference or notional salary) - check your scheme rules.
Does EV sacrifice affect mortgage applications?
It can. If a lender assesses your income after the sacrifice, the lower salary reduces what you can borrow. Lenders differ, so ask the lender or a mortgage adviser how they treat salary sacrifice before you sign up if you plan to buy soon.
How does the rising BIK rate affect long-term value?
The zero-emission rate is 4% in 2026/27 and 5% in 2027/28. HMRC's policy paper on company car rates for 2028 to 2030 adds 2 points a year after that: 7% in 2028/29 and 9% in 2029/30. A three-year agreement starting in April 2026 spans 4%, 5% and 7%. The savings shown on this page are for 2026/27; later years cost more in benefit-in-kind tax.