UK Government announces world-leading ultra-low benefit in kind rate for EV drivers

The UK Government has confirmed in its Autumn Statement that its world-leading, ultra-low Benefit in Kind (BiK) tax rate will remain at 2 percent until April 2025 before rising by just 1 percent each financial year until 2028.
UK Government announces world-leading ultra-low benefit in kind rate for EV drivers
Courtesy of NREL.

This minor rate increase will enable thousands of basic taxpayers across the country to access a new battery electric vehicle (EV) for the first time.

BiK rates are a form of tax an employee has to pay for receiving a perk or benefit related to their employment. HMRC requires all cars on lease through a salary sacrifice agreement to pay a certain level of BiK tax. The vehicle’s CO2 emissions determine this rate: the higher the CO2 emissions, the higher the tax. With zero tailpipe emissions, electric cars have a substantially lower BiK rate than their petrol or diesel counterparts.

“The UK government’s announcement has secured a world-leading policy that will democratise access to electric cars” said Steve Tigar, CEO and Founder of loveelectric. “Drivers across the country will be delighted to hear that EV BiK tax rates will remain substantially lower than fossil-fuelled cars for the foreseeable future. The uptake of electric cars across the country has been on an upswing, with the millionth EV registered in September this year: a critical step towards reaching our net-zero goals. The UK government’s announcement today has shown that stable market growth and a healthy environment can go hand in hand.”

While many will be relieved regarding this statement, drivers on BiK taxable leases may be concerned about the impact on their monthly payments. However, with just a 1 percent increase on BiK rates from April 2025, their wallets will be minimally affected. loveelectric offers a salary sacrifice electric car benefit that helps employees save hundreds of pounds per month - all while driving a new electric car and supporting the UK’s net-zero transformation.

“As we endure the rising cost of living, drivers need to understand the impact on their tax bills to ensure financial stability” added Mr Tigar. “The Government’s confirmation of a favourable BiK rate is great news for the future for electric cars in the UK and support a united transition to a low-carbon future.”

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