The Government’s decision to confirm company car Benefit-in-Kind (BIK) tax rates through to the 2030/31 tax year could provide fresh momentum for salary sacrifice schemes, following months of uncertainty that have caused some employees to delay vehicle orders and employers to put new schemes on hold.
Announced as part of the Autumn Budget on 28 October 2026, the extended tax schedule gives businesses and company car drivers a clearer picture of the tax they can expect to pay over the coming years. The announcement is particularly relevant to electric vehicle leasing, where favourable BIK rates have played an important role in encouraging employees to choose electric cars.
The confirmation also comes at a time when businesses are reviewing their company car policies, assessing the financial implications of electrification and considering how salary sacrifice could form part of their wider employee benefits packages.
Company Car BIK Rates Confirmed Until 2030/31
The Treasury has published company car tax rates covering five tax years, extending the current schedule through to 2030/31.
One of the key announcements is that the BIK rate for fully electric company cars will increase by just one percentage point, reaching 10% in 2030/31. This relatively gradual adjustment is expected to help preserve the financial attractiveness of electric vehicles for company car drivers.
The longer-term visibility is particularly useful for employees entering into vehicle agreements lasting three or four years, as it provides a clearer indication of how their tax position could develop during the contract.
Key details from the Budget announcement:
| Area | Government announcement | What It Means |
|---|---|---|
| Announcement date | 28 October 2026 | Future company car tax rates confirmed |
| Tax coverage | Through to 2030/31 | Greater visibility for longer-term vehicle planning |
| Electric car BIK | 10% in 2030/31 | A relatively gradual increase in electric car taxation |
| Rate adjustment | One percentage point increase | Helps maintain a favourable tax position for EVs |
| Salary sacrifice | Greater long-term certainty | Could encourage employees to proceed with delayed orders |
| Employer planning | Five years of published rates | More information available when assessing new schemes |
The 10% figure relates specifically to fully electric company cars in 2030/31. It should not be applied to plug-in hybrids or other vehicle types, which have their own BIK calculations.
Businesses looking to understand the wider taxation picture can also read our guide to company car tax statistics and our breakdown of plug-in hybrid BIK rates for 2026.
Salary Sacrifice Schemes Could Benefit From Renewed Confidence
The absence of confirmed long-term BIK rates had created uncertainty for employees considering salary sacrifice vehicles.
Under a salary sacrifice arrangement, an employee agrees to exchange part of their gross salary for a non-cash benefit, such as a leased company car. Electric vehicles have become particularly attractive within these schemes because of their comparatively low company car tax rates.
However, employees considering agreements lasting several years had been reluctant to commit without knowing how their tax liabilities might change during the contract.
This uncertainty had affected more than individual vehicle orders. Some employers had also postponed plans to introduce salary sacrifice schemes altogether, preferring to wait until the Government provided a clearer indication of future taxation.
The latest announcement could help reverse that position by giving both employers and employees a better understanding of the tax arrangements over the lifetime of a typical vehicle agreement.
Our guide to electric car salary sacrifice in the UK explains how these arrangements work, while our coverage of salary sacrifice growth in the UK leasing market looks at the wider role of these schemes in vehicle leasing.
Why Electric Company Cars Remain Attractive
The favourable BIK treatment of electric vehicles has been an important driver of company car electrification.
For employees, the tax position can make an electric company car an attractive alternative to a comparable petrol or diesel model. For employers, offering electric vehicles can also support wider sustainability objectives and help modernise their company car fleets.
The extension of the published tax schedule provides greater confidence for businesses considering whether to introduce more electric vehicles into their fleets.
However, the financial case for switching is not based on BIK alone. Employers and employees should also consider:
- Vehicle leasing costs: Monthly rentals and initial payments can vary considerably between models.
- Tax implications: The applicable BIK rate depends on the vehicle’s emissions and other relevant tax criteria.
- Charging costs: Home, workplace and public charging arrangements can influence overall running costs.
- Driving requirements: Vehicle range, annual mileage and journey patterns should be considered before choosing an electric car.
- Vehicle availability: Delivery times and model availability can affect when employees can take delivery of a new vehicle.
Businesses comparing suitable models can explore our best electric cars to lease, alongside our guide to how EV charging works for businesses.
The wider financial considerations are also covered in our article examining whether electric cars are cheaper to run than petrol cars.
What The Budget Means For Employers And Fleet Managers
The publication of future BIK rates gives employers an opportunity to revisit company car policies and assess whether salary sacrifice should form part of their employee benefits offering.
Businesses that previously delayed introducing a scheme may now be in a better position to assess its long-term viability.
However, employers should look beyond the headline tax rates when considering a new arrangement. Salary sacrifice requires careful administration and consideration of employment and payroll obligations, including National Minimum Wage requirements and the impact on employees’ contractual pay and other salary-related benefits.
For fleet managers, the announcement also provides another consideration when reviewing vehicle replacement cycles and comparing different powertrains.
A structured approach to vehicle selection can help businesses assess the suitability of electric, plug-in hybrid, petrol and diesel vehicles against their operational requirements.
Companies reviewing their wider arrangements can explore our business car leasing options and learn more about the benefits of leasing through a limited company.
For organisations managing multiple vehicles, effective fleet management solutions can also help bring vehicle procurement, replacement planning and ongoing fleet administration together.
Other Budget Measures Affecting Business Motoring
Although company car taxation was one of the most significant areas of the Budget for fleets, several other announcements are relevant to businesses operating vehicles.
The continuation of the fuel duty freeze provides some stability for employers running petrol and diesel vehicles, helping to limit additional pressure from fuel taxation.
The Government also provided further details about Electric Vehicle Excise Duty (eVED), giving businesses more information about the future taxation of electric motoring.
This is particularly relevant to fleet operators assessing the long-term costs of switching to electric vehicles, as taxation and charging expenses increasingly form part of whole-life vehicle cost calculations.
Businesses can read more about the Government’s plans in our coverage of confirmed EV road tax rules for fleets from 2028.
For further context on the wider financial changes announced in the Budget, see our 2026 Budget vehicle leasing coverage.
The UK adoption of Euro 7 emissions regulations was another development highlighted following the Budget, adding to the longer-term regulatory considerations facing vehicle manufacturers and the wider automotive industry.
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