Salary sacrifice: pension and car
Electric car BIK rates from 2026/27 to 2029/30, and what they cost through salary sacrifice
Company car tax on an electric car depends on one figure: the appropriate percentage of the list price. It is set in law for each year to 2029/30. Here are the rates and what they mean for a car taken through salary sacrifice.
Independent site, not a government service. Relief is claimed through your pension provider, your payroll or HMRC (Self Assessment or the GOV.UK claim service).
The taxable benefit of a company car is its list price multiplied by an appropriate percentage set in section 139 of the Income Tax (Earnings and Pensions) Act 2003. For a car with zero emissions it is 4% in 2026/27 and 5% in 2027/28 under the Finance Act 2023, then 7% in 2028/29 and 9% in 2029/30 under the Finance Act 2025. Plug-in hybrids from 1 to 50 g/km are taxed by electric range until 2027/28, from 4% to 16%, and at a single 18% in 2028/29 and 19% in 2029/30. Through salary sacrifice, cars up to 75 g/km keep these rules. A higher rate taxpayer with a £45,000 electric car pays £720 of company car tax this year and £1,620 in 2029/30. Budget 2026 announced 10% for 2030/31, not yet law.
Company car tax on an electric car, year by year
Example, not your result yet· change a figure to see yours
Car tax this year
£720
| 2027/28 at 5% | £900 a year |
| 2028/29 at 7% | £1,260 a year |
| 2029/30 at 9% | £1,620 a year |
Figures checked by Radif Partners · Editorial policy · How the sums are done
Appropriate percentages by year
| Car | 2026/27 | 2027/28 | 2028/29 | 2029/30 |
|---|---|---|---|---|
| Zero emission | 4% | 5% | 7% | 9% |
| 1 to 50 g/km, 130 miles or more | 4% | 5% | 18% | 19% |
| 1 to 50 g/km, 70 to 129 miles | 7% | 8% | 18% | 19% |
| 1 to 50 g/km, 40 to 69 miles | 10% | 11% | 18% | 19% |
| 1 to 50 g/km, 30 to 39 miles | 14% | 15% | 18% | 19% |
| 1 to 50 g/km, under 30 miles | 16% | 17% | 18% | 19% |
| Maximum (most polluting) | 37% | 37% | 38% | 39% |
The rates for 2028/29 and 2029/30 were set two years ahead by the Finance Act 2025 so that leasing companies and employees could plan. The HMRC guide 480 shows how the percentage is chosen for each car, including the rounding of range.
A four-year lease from 2026/27
An employee on £55,000 gives up £450 a month for a £42,000 car from April 2026 to March 2030. With an electric car the real cost over the four years, after tax and NI saved and company car tax paid, comes to about £16,567, against £21,600 of salary given up. A plug-in hybrid with 45 miles of range costs about £22,111 over the same period, because its rate jumps when the range bands end in 2028/29. These figures keep 2026/27 tax bands for every year, since later bands are not set.
Why the saving depends on your tax band
The salary given up saves tax and NI at your marginal rates, while the benefit is taxed at your Income Tax rate only. For a basic rate taxpayer on £35,000, the same car and payment cost £352 a month in 2026/27, a saving of 21.78%. For an additional rate taxpayer on £160,000, it is £302 a month, a saving of 33%. Between £100,000 and £125,140 the saving is largest, because the salary given up also wins back Personal Allowance.
Salary sacrifice rules for cars
Since April 2017, most benefits provided through salary sacrifice are taxed on the higher of the salary given up and the normal benefit value. Cars with CO2 emissions of 75 g/km or less were left out of that rule, so an electric car or a plug-in hybrid under the limit is taxed on the list price times the appropriate percentage, however much salary you give up. That is what makes these schemes work. The April 2029 cap on NI-free sacrifice is about pension contributions only: the guide to the cap explains it.
What Budget 2026 added
The Budget of 28 October 2026 announced that appropriate percentages for 2030/31 will be one point above 2029/30 in every band: 10% for zero emission cars, 20% for cars from 1 to 50 g/km, and other rates up by one point to a maximum of 40%. Until a Finance Act sets them, the calculator stops at 2029/30. A lease that runs into 2030/31 should assume at least that rate.
Before signing
- Use the list price including options, not the discounted lease price.
- Check the employer's early termination terms if you leave or go on long leave.
- Ask whether your pension contributions are based on salary before or after the car deduction.
- Make sure the sacrifice leaves your pay above the National Minimum Wage.
The salary sacrifice car calculator gives the monthly cost for your own figures and any of the four years. For pension sacrifice, see the pension calculator for sacrifice.
The benefit in kind on three cars, year by year
A £30,000 electric hatchback has a taxable benefit of £1,200 in 2026/27 and £2,700 in 2029/30. A £45,000 electric estate goes from £1,800 to £4,050. A £70,000 electric SUV goes from £2,800 to £6,300. The tax is the benefit times your Income Tax rate: 20%, 40% or 45% in England, Wales and Northern Ireland, or the Scottish rates. Even at 9%, an electric car is taxed at well under a quarter of the rate of a petrol car at the maximum.
Plug-in hybrids in detail
Hybrids from 1 to 50 g/km have five bands by electric range until 2027/28. A long-range plug-in hybrid with 130 miles or more pays the same as an electric car; one with under 30 miles pays 16%. From 2028/29 all of them pay 18%, under the Finance Act 2025, section 5. A hybrid lease that starts in 2026/27 and runs to 2029/30 therefore sees its rate more than double in the third year for a car with a mid-range battery. Cars above 50 g/km and up to 75 g/km keep the normal rules under salary sacrifice but have higher percentages.
List price, options and accessories
The list price is the price of the car on the day before it was first registered, with VAT, delivery and any optional accessories fitted at the time. Discounts the employer or lessor negotiates do not reduce it. A capital contribution you make towards the car, up to £5,000, is deducted. Accessories added later count from the date they are fitted if they cost more than £100. Charging cables and a home charger supplied with the car are part of the deal, not separate benefits, in most schemes.
The employer's side
The employer pays Class 1A NI at 15% on the taxable benefit and saves secondary Class 1 NI at 15% on the salary given up. On a £42,000 electric car with £450 a month sacrificed, that is £252 paid against £810 saved a year in 2026/27. As the rate rises, Class 1A grows, but the saving stays far larger, which is why employers keep offering the schemes.
Ending a lease early
Most schemes run for two to four years. If you leave the employer, the sacrifice ends and the employer usually passes on a termination charge unless the scheme has insurance for it. Some schemes waive the charge for redundancy, long-term sickness or parental leave; others let a new employee take the car over. The benefit in kind stops from the day the car is no longer available to you, and the tax for the year is reduced pro rata. Read the termination section of the scheme before you order, because it is where these schemes differ most.
Scottish taxpayers and company cars
Company car tax uses your own Income Tax rates, so a Scottish higher rate taxpayer pays 42% on the benefit, and the salary given up saves 42% as well. Between £43,663 and £50,270, the sacrifice also saves 8% NI, so the overall saving on a car scheme in that slice is larger than for an English taxpayer on the same pay. The car calculator has a Scotland setting under its advanced fields.
Rates, at a glance
For a quick check: electric cars 4%, 5%, 7% and 9% from 2026/27 to 2029/30; long-range plug-in hybrids the same until 2027/28, then 18% and 19%. Multiply the list price by the rate, then by your Income Tax rate, for the yearly tax. The mini-calculator at the top does it for each year.