Reviewed by Mustafa Bilgic
Founder, WebCalculator · Last updated 26 July 2026
BIK rates from HMRC's company car tax tables. Tax savings based on 2026/27 IT and NI rates. Estimates only — not financial advice.
An electric car through salary sacrifice is one of the most tax-efficient benefits available to UK employees. With a Benefit in Kind rate of just 4% for 2026/27, the tax cost of driving a pure electric car is minimal. Enter the car's list price and your salary below to see your monthly cost, BIK tax, and total savings compared to paying out of taxed income.
Car list price and your salary
Your employer leases a fully electric car and you pay for it through salary sacrifice — a deduction from your gross pay before tax or NI. The car is classed as a company car, so you pay Benefit in Kind tax on a percentage of its list price. For pure EVs in 2026/27, that percentage is just 4%.
| Tax year | BIK rate (0 g/km) |
|---|---|
| 2025/26 | 3% |
| 2026/27 | 4% |
| 2027/28 | 5% |
| 2028/29 | 7% |
On a £40,000 EV the 4% BIK means HMRC treats £1,600 as taxable benefit. A basic-rate taxpayer pays 20% of that — £320 a year (£27/month) in BIK tax. Compare that to the tax and NI savings of thousands of pounds on the salary sacrifice. Source: GOV.UK company car tax.
For general BIK calculations including non-EV cars, see the benefit in kind calculator or the company car tax calculator. For other salary sacrifice benefits, try the Cycle to Work calculator.
The Benefit in Kind rate for pure electric vehicles (0 g/km CO2) is 4% for the 2026/27 tax year. This rises to 5% in 2027/28 and 7% in 2028/29. Source: gov.uk/tax-on-company-benefits.
On a £40,000 electric car with a £50,000 salary, you sacrifice about £555 a month gross. The BIK tax on the car is only £32 a month (4% of £40,000 at 20%). Your total cost is far below a PCP or outright purchase because you save Income Tax and NI on the sacrifice amount.
Most schemes include the lease cost, insurance, maintenance, breakdown cover, and a home charger. Road tax (VED) for zero-emission cars registered before April 2025 was free but from April 2025 the standard rate applies. Your employer arranges everything through a leasing provider.
No. Salary sacrifice reduces your gross pay for tax purposes but your Personal Allowance of £12,570 still applies. However, your sacrifice cannot take your pay below the National Minimum Wage.
For most employees, yes. With a 4% BIK rate and tax savings of 28% to 42% on the sacrifice, the effective monthly cost is typically 30% to 50% less than a personal PCP deal — especially once insurance and maintenance are factored in.
If you leave, you may need to take over the lease personally, return the car, or pay an early termination fee. The exact terms depend on your employer's scheme. Check the exit terms before signing up.