The example: Kia EV3 for a basic-rate taxpayer
- List price (P11D value): £35,990.
- BIK rate for 2026/27: 4% for a zero-emission car.
- Taxable benefit: £35,990 × 4% = £1,440 (£1,439.60).
- Your tax at 20%: about £288 a year — roughly £24 a month through your tax code.
At 40% it would be £576 a year. Your employer also pays Class 1A National Insurance of 15% on the benefit (about £216).
The same car over the next five tax years
| Tax year | BIK % | Benefit | Tax at 20% | Tax at 40% |
|---|---|---|---|---|
| 2026/27 | 4% | £1,440 | £288 | £576 |
| 2027/28 | 5% | £1,800 | £360 | £720 |
| 2028/29 | 7% | £2,519 | £504 | £1,008 |
| 2029/30 | 9% | £3,239 | £648 | £1,296 |
| 2030/31 | 10% | £3,599 | £720 | £1,440 |
The 2030/31 rate of 10% was announced in the 28 October 2026 Budget.
What else is nice about electric?
- No fuel benefit charge on electricity, even if your employer pays for charging.
- Charging at work is tax-free for employees.
- Your employer can repay business miles at 7p (home charging) or 15p (public charging) under the advisory fuel rates.
Things that can change your number
- Options count. The P11D value includes options and delivery, so ask your fleet team for the exact figure.
- Capital contributions you make towards the car (up to £5,000) reduce the price used.
- Scotland: the benefit is the same, but you pay Scottish income tax rates on it.
- Salary sacrifice: if you give up salary for the car, the rules usually still use these BIK figures for zero-emission cars, but check your scheme.
Model figures (CO2, engine size, list price) come from the manufacturer’s own UK price list, as on the main calculator. Prices change often — check the current list price for your exact version.
Why are the rates rising?
The low electric rates were introduced to encourage switching. Now that electric cars are more common, the government is raising the rate by one or two points a year: 5% in 2027/28, 7% in 2028/29, 9% in 2029/30 and 10% in 2030/31. Even at 10%, an electric car is still far cheaper than a petrol car, which would usually be in the 25%–37% range.
How the tax is collected
You do not write a cheque. Your employer reports the car to HMRC, and HMRC lowers your tax-free personal allowance through your tax code, or your employer “payrolls” the benefit so the tax comes off each payslip. For the EV3 at 20% that is about £24 a month. Check your tax code notice when you first get the car — if the list price on it looks wrong, ask HMRC or your employer to correct it.
FAQ
How much tax will I pay on an electric company car in 2026/27?
4% of the list price at your tax rate. For a £35,990 Kia EV3 that is a £1,440 benefit, so about £288 a year at 20% or £576 at 40%.
What will the same EV cost in 2028/29?
The rate rises to 7%, so the benefit is about £2,519 and the tax £504 at 20%.
Is there a fuel benefit charge on an electric car?
No. Electricity is not a fuel for the fuel benefit charge, so free charging does not add any tax.
Sources: GOV.UK “Check future rates for petrol-powered and hybrid-powered company cars” (updated 30 Sep 2026); HMRC policy papers on appropriate percentages 2028–2030 and 2030–2032 (28 Oct 2026); HMRC EIM24710 (PHEV easement); GOV.UK van and fuel benefit charges 2026/27; CIPP (2027/28 fuel multiplier £30,200). Checked 5 November 2026.