Electric Vehicle Tax
The Real Cost of Your Company EV
Electric vehicles attract just 3% Benefit-in-Kind tax in 2025/26 — making salary sacrifice the most tax-efficient way to get a new car. See your actual savings below.
Vehicle & Salary
The list price including VAT, delivery, and options. Check the manufacturer's website or your lease quote.
How EV Salary Sacrifice Works
Salary Sacrifice: You agree to give up part of your gross salary in exchange for a fully insured, maintained electric vehicle. Because the sacrifice comes before tax, you save income tax and National Insurance on the sacrificed amount.
Benefit in Kind (BiK): You pay a small amount of tax on the car as a benefit — currently just 3% of the P11D value for fully electric vehicles, rising gradually to 9% by 2029/30.
Net Effect: The tax saved on your salary sacrifice far outweighs the BiK tax, resulting in a significantly lower effective cost than leasing or buying privately.
Based on 2025/26 tax year rates. BiK rates confirmed through 2029/30. For informational purposes only — consult your employer or a qualified tax advisor.
Effective Monthly Cost
£335/month
You save 33% compared to paying from net income — that's £1,980/year in tax savings
| Before | After Sacrifice | |
|---|---|---|
| Gross Income | £85,000 | £79,000 |
| Income Tax | −£21,432 | −£19,572 |
| National Insurance | −£3,711 | −£3,591 |
| Net Take-Home | £59,857 | £55,837 |
| Monthly EV Cost | — | −£4,020 |
| Effective Take-Home | £59,857 | £51,817 |
Savings Breakdown
Multi-Year Projection
| Tax Year | BiK Rate | BiK Value | Est. Saving |
|---|---|---|---|
| 2025-26 | 3% | £1,350 | £1,980 |
| 2026-27 | 4% | £1,800 | £1,800 |
| 2027-28 | 5% | £2,250 | £1,620 |
| 2028-29 | 7% | £3,150 | £1,260 |
| 2029-30 | 9% | £4,050 | £900 |
BiK rates are confirmed up to 2029-30. Savings estimates use current tax rates and thresholds.
Editor's Note
As a higher-rate taxpayer, you benefit from 40% income tax savings plus 2% NI savings on every pound sacrificed. Your effective saving rate of 33% means the car costs you significantly less than leasing privately.