What is Benefit-in-Kind?

It’s often referred to as ‘company car tax’, but Benefit-in-Kind (BiK) applies to salary sacrifice too. In fact, any workplace benefits of monetary value will be subject to this type of tax. Here we explain how it works, what the current electric car BiK rates are, and why switching to an electric vehicle (EV) or hybrid is a great way to save!

Benefit-In-Kind explained

The term ‘Benefit-in-Kind’ refers to any non-cash benefits provided to you by your employer. This applies to private healthcare or medical insurance, rent-free or below-market-rent accommodation, and childcare benefits. It also applies to any vehicles, such as a company car or through a salary sacrifice car scheme.

These benefits are subject to BiK tax, so that’s a cost you’ll need to factor in with the salary sacrifice car scheme. The good news is, BiK on electric cars is significantly cheaper than that of petrol or diesel cars, making salary sacrifice a tax-efficient way to drive electric.

Here’s the full table of company car and salary sacrifice BiK rates from financial year 2025/26 to 2029/2030:

How to work out BiK for cars

This formula below is a quick way to work out BiK for cars:

P11D value (value of car) x BiK tax % x income tax rate

So let’s say:

• Your car’s P11D value is £35,000
• Your BiK tax band is 3%
• Your income tax rate is 20%

35,000 x 3% x 20% =£210 per annum (make sure to include the %, otherwise the formula doesn’t work)

BiK is usually paid monthly, directly from your gross salary amount, so the total cost would be spread across the year.

How HMRC collects BiK

If you’re an employer:

If you have not set up real time PAYE payments via payrolling, you need to report any BiK to HMRC by July 6 after the tax year ends.

If you access a salary sacrifice or company car scheme with Zenith through your employer:

The BiK should be automatically deducted from your salary, so there is nothing you need to do.

Low BiK tax and more with salary sacrifice

With favourable rates of BiK on electric cars and hybrid cars, switching to electric could be a fantastic way to look after your cash, while also reducing your carbon footprint.

But that’s not all – low BiK rates aren’t the only money-saving benefit with salary sacrifice! The cost of the car is taken out of your salary before Income Tax and National Insurance, making it even more tax efficient. Plus, EVs are typically cheaper to run compared to petrol or diesel cars, especially if you charge overnight at home (as you’ll benefit from lower energy tariffs).

You’ll also get an all-inclusive package* so you can hit the road with complete peace of mind that all the essentials are sorted for you. Our salary sacrifice package includes fully comprehensive insurance, road tax*, scheduled servicing and maintenance, breakdown cover, replacement tyres, windscreen and glass cover, and accident management.

With no need for a deposit or any other upfront costs, it really doesn’t get easier to drive away in a fancy new EV!

^{*Salary sacrifice pricing includes all maintenance and servicing, road tax, insurance, breakdown and recovery, tyres, glass and accident management. It excludes the cost of manufacturer subscriptions, the end-of-contract collection fee (minimum of £140) and any increases to road tax (increases will be subject to VAT). You will not own the car. T&Cs and exclusions apply, check your employer’s scheme policy for details. Subject to eligibility. Benefit in Kind (BiK) tax payable. Savings dependent on tax band.}