The 2026 Budget provided some welcome certainty for businesses and employees transitioning to electric vehicles (EVs), with confirmation of company car tax rates through to 2030/31. The Chancellor also introduced measures aimed at reducing EV charging costs, extended fuel duty support and confirmed mileage allowance rate changes.
But what do the announcements mean in practice for fleet operating costs, vehicle choice and the attractiveness of salary sacrifice schemes?
Here's Gofor's guide to the key Budget 2026 announcements and their implications.
What are the key Budget changes for electric vehicles?
Electric car Benefit in Kind (BIK) rates - what’s changing?
One of the most significant announcements for company car drivers is confirmation of the BIK rates for 2030/31. This built on the rate information already set out up to April 2030.
The BIK rate for fully electric company cars will increase just one percentage point from April 2030. This provides reassurance for businesses and employees planning their next vehicle, particularly those entering a four-year lease.
The BIK Rates for zero-emission company cars are:
Tax Year - 2026/27
Electric Car BIK Rate - 4%
Tax Year 2027/28
Electric Car BIK Rate 5%
Tax Year - 2028/29
Electric Car BIK Rate - 7%
Tax Year -2029/30
Electric Car BIK Rate - 9%
Tax Year - 2030/2031 (newly confirmed)
Electric Car BIK Rate - 10%
How do the Budget changes affect electric car salary sacrifice?
The confirmation of future BIK rates is positive news for Salary sacrifice schemes, which allow employees to exchange part of their gross salary for a non-cash benefit, including a leased electric car.
Before the Budget, uncertainty over future BIK rates had reportedly led to some businesses delaying vehicle orders and reconsidering the introduction of salary sacrifice schemes. With rates now confirmed through to 2030/31, employers have greater visibility of tax implications and can plan salary sacrifice schemes with increased confidence. It also provides reassurance for employees considering an EV through their employer.
What changes did the Budget bring for EV charging?
The Budget didn’t go as far as we might have liked in terms of reducing EV public charging costs, but there were some positive moves from the Government.
EV home charging
Household electricity VAT rate cut remains - the current reduction, from 5% to 0% on household electricity in Great Britain (effective October 1, 2026), stays until July 1, 2027 which should help keep home EV charging costs down.
No planning permission required for qualifying cross-pavement EV charging installations which allow charging cables to run beneath the pavement from a property to a vehicle parked on the street.
This measure, which came into effect on 21 October 2026, is aimed at making home charging more accessible for people without off-street parking and could save drivers up to a quoted £300 on charger installation.
EV public charging
The 20% VAT rate on public EV charging remains unchanged, continuing the marked difference between the VAT treatment of domestic and public charging.
In better news, the Government has announced two measures aimed at reducing the cost of public charging which should support wider EV adoption longer term:
‘Tariff-porting’ taskforce - The Government will establish an industry taskforce to explore how drivers could access their cheaper domestic electricity tariff at lower-powered public charge points.
£100 million EV charging fund - From Spring 2027, £100 million will be made available over two years to help reduce costs at lower-powered public charge points, particularly those used by drivers charging near their homes.
Electric Vehicle Excise Duty (eVED)
The Budget provided some further detail on the Government's plans to introduce a mileage-based charge for electric vehicles, known as Electric Vehicle Excise Duty (eVED) - an extension of the current Vehicle Excise Duty regime.
Originally announced in the 2025 Budget, eVED is due to come into effect on 1 April 2028. It will apply to battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs) and hydrogen fuel cell electric vehicles (HFCEVs). The initial eVED tax rates will be:
• BEVs and HFCEVs - 3p per mile
• PHEVs - 1.5p per mile
The rates will be increased in 2029/2030, and are likely to rise in line with Consumer Prices Inflation annually.
How will eVED work?
The eVED charge will be calculated using estimated annual vehicle mileage, with special measures planned for fleets - including the ability to estimate mileage centrally. Further details on how these arrangements will work are expected ahead of implementation in April 2028.
For fleet operators, eVED will mean additional costs when calculating the total cost of ownership of electric and plug-in hybrid vehicles, as well as new management processes.
"This Budget has provided welcome certainty on future company car tax rates, which is particularly positive for fleets and electric vehicle salary sacrifice schemes. The relatively low BIK rates continue to make EV salary sacrifice an attractive option for both employers and employees.
We’re also pleased to see the extension of support for home electricity costs and new EV charging measures. Whether these latest measures go far enough to support the UK's EV transition remains to be seen - we look forward to seeing how the Government’s strategy develops following the ZEV mandate consultation."
Graham Lesslie, CEO, Gofor.
What are the new BIK rates for hybrid, petrol and diesel company cars?
The Budget confirmed a one-percentage-point increase in company car BIK rates for 2030/31 across all vehicle bands, up to a maximum of 40%.
• Cars emitting 1 to 50g/km of CO2 - BIK up from 19% to 20%
• All other emission bands will increase 1%, up to a maximum of 40%
Other key budget changes for fleets
Mandatory company car payrolling delayed until April 2027
The Government confirmed that mandatory payrolling for company cars, car fuel, vans, van fuel and employer-provided medical benefits will begin on 6 April 2027. This means employers will typically need to report taxable benefits through payroll systems, in place of annual P11D reporting.
The revised timetable gives employers more time to prepare their payroll systems and processes for the forthcoming changes, although we’re advising our customers to prepare now.
Fuel duty cut extended until July 2027
The temporary 5p-per-litre fuel duty cut has been extended until 1 July 2027. This will provide some continued support for businesses operating petrol and diesel vehicles, although fleets will need to factor in the potential for continued higher fuel costs beyond the extension.
Grey fleet - Approved Mileage Allowance Payments (AMAPs) increase
For employees who use their private cars on business (grey fleet), the Government confirmed AMAP changes. This includes making permanent the increase to the rate for the first 10,000 business miles announced in May this year.
The tax-free mileage allowance rates are:
• First 10,000 business miles - 55p per mile, effective retrospectively from 6 April 2026, (previously 45p)
• Above 10,000 business miles - 25p per mile for 2026/2027 tax year, rising to 35p per mile from 6 April, 2027
What should fleet operators do next?
For fleet operators, the priority is to review the measures to understand the specific impact for their fleet operating costs, vehicle choices and total cost of ownership.
If you’re looking for further information on how the Budget could affect your fleet or salary sacrifice scheme, get in touch with the Gofor team.
For more information:
Full Autumn Budget 2026 document - Gov.uk
Electric vehicle excise duty - Gov.uk
