BIK & Salary Sacrifice Car Lease

Discover the ins and outs of Benefit-in-Kind (BIK) tax, how it’s calculated, and its impact on salary sacrifice car leasing. Learn how this popular scheme can make driving a new car more affordable while maximising your tax efficiency.

What is Benefit In Kind

Benefit in kind refers to non-cash benefits that employees receive from their employer in addition to their salary or wages. These benefits are often provided to employees as a way to attract and retain talent, boost employee morale and productivity, and provide additional incentives for employees to stay with the company. Benefit in Kind is sometimes referred to as company car tax. When discussing a salary sacrifice car lease, the BIK refers to the tax payable for the benefit which in this case is a leased car.

Currently, the BIK rate for electric car leases is 3% and has been fixed by the UK government until April 2026.  After this BIK rates will be increased by 1% each year until 2028

This is great news for anyone considering a salary sacrifice as it gives assurance that all-electric vehicles will maintain their cost-effectiveness for the foreseeable future. The BIK percentage increases as the CO2 produced by the car increases and the electric range decreases. The Tax is then dependent on your tax band and the total value or P11D of the vehicle to be leased.


Calculating Benefit In Kind Tax

Here at DreamLease we take care of all calculations and create personalised quotations for the vehicle you would like to Salary Sacrifice. However, below you can see the Benefit In Kind Calculation which uses the value of the vehicle the BIK tax band that the car falls into and the tax band that an employee's salary attracts.

P11D Value x BIK Rate x Income Tax Band = BIK Tax/month

Simply put, the higher the electric range the lower the BIK Tax will be and the higher the vehicle value the higher the BIK Tax will be.

For Example please see the estimated BIK Tax payable per month based on a 40% taxpayer.

Tesla Model 3 EV = £40.00 VW Golf Plug-In Hybrid  =  £10.00 Audi A3 TDI Diesel = £500.00

*Figures are for illustrative purposes only


Current BIK Rates

BIK Rates on EVs will increase by 1% each year until 2028.

CO2 (g/km)

Electric range (miles)

2023/24 (%)

2024/25 (%)

2025/26 (%)

2026/27 (%)

2027/28 (%)

2028/29 (%)

2029/30 (%)

0

N/A

2

2

3

4

5

7

9

1-50

>130

2

2

3

4

5

18

19

1-50

70-129

5

5

6

7

8

18

19

1-50

40-69

8

8

9

10

11

18

19

1-50

30-39

12

12

13

14

15

18

19

1-50

<30

14

14

15

16

17

18

19

51-54

 

15

15

16

17

18

19

20

55-59

 

16

16

17

18

19

20

21

60-64

 

17

17

18

19

20

21

22

65-69

 

18

18

19

20

21

22

23

70-74

 

19

19

20

21

21

22

23

75-79

 

20

20

21

21

21

22

23

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What our customers say...

Mark Ole's Fantastic service from Charne Headech
5 stars

Fantastic service from Charne Headech. From the start of my enquiry to completing my order, both the service and communication absolutely brilliant. Would highly recommend.

Date of experience: 10 June 2025

gsmarway1 I can’t recommend Billal Anjum enough!!
5 stars

I can’t recommend Billal Anjum from Dream Lease highly enough! We needed a lease car sorted in an incredibly tight timeframe, and Billal went above and beyond to deliver. Not only did he find us a car, but it was far better specced and at a fantastic price—truly exceeding our expectations.
Despite facing a few hurdles with the finance brokers (separate to Dream Lease) due to our very unique personal circumstances, Billal’s dedication to helping us get across the line was outstanding. Although he didn’t really need to be; he was with us every step of the way, always ensuring we felt supported and reassured. His promptness, approachability, and genuine care made a world of difference, alleviating our concerns and keeping us confident throughout the process.

Billal’s commitment to putting our interests first was clear from start to finish. Thanks to him, we’re now driving our dream car, and moving forward, I’ll only ever go to Billal for any future lease vehicle needs. Thank you so much for your unwavering support and fantastic service!

Date of experience: 16 January 2025

Karen Baker Aaron at DreamLease was very helpful
5 stars

Aaron at Dream Lease was very helpful sending me quotes for 4 options I wanted to consider on the same car. He explained everything to me with a pleasant and professional manner. Haven’t got the car yet, 2 weeks from order date, but the whole process so far was great!

13/03/2024

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