Electric cars won’t stay tax-efficient forever. From April 2025, the BiK tax rate on EVs will start rising—affecting both cost planning and payroll reporting and just a year later, most benefits must be reported monthly through payroll. If your company offers electric vehicles, this is a critical window to prepare.
Electric vehicles have enjoyed tax-friendly treatment for years, but that’s shifting fast. The BiK rate will climb from 2% to 9% over five years, while road tax exemptions will end in April 2025. From April 2026, the entire benefit-in-kind system will move to payroll—with P11Ds becoming a thing of the past for most benefits.
What’s Changing?
- BiK rate rises to 3% in 2025
- Reaches 5% by 2027 and 9% by 2030
- EV road tax applies from April 2025
- P11Ds phased out from April 2026
- Company-paid tax needs grossing-up
How to Get Ready?
- Forecast total BiK costs
- Review EV packages for staff
- Upgrade payroll software
- Prepare for grossed-up benefits
- Train staff on new rules
EVs are still a smart choice—but that advantage is narrowing. Act early to avoid nasty surprises and simplify your compliance work.