Autumn Budget 2026: What It Means for EV Drivers and Employers

The Autumn Budget 2026 was delivered on Wednesday 28 October, and if you drive an electric car (or you're thinking about getting one through salary sacrifice), there wasn't much drama. Honestly, that's a good thing.

The biggest news for EV drivers is certainty. Company car tax is now set all the way to April 2031, the pay-per-mile tax has a clearer plan behind it, and there's a little more help with charging costs. Here's everything in the Budget that affects electric cars, what it means for your monthly costs, and what (if anything) you need to do.

Autumn Budget 2026 for EV drivers: the key points

The good news

• Company car tax on electric cars will be 10% in 2030/31, up one percentage point from 9%. Rates are now set until April 2031.
• Nothing changes before then. The rates already in place for 2026/27 to 2029/30 (4%, 5%, 7% and 9%) stay exactly as they were.
• Salary sacrifice for cars is untouched. No new rules, and no change to the headline rates of income tax or National Insurance.
• 0% VAT on home electricity is extended to 1 July 2027.
• £100 million from spring 2027 to bring down the cost of local, lower-powered public chargers.

What to keep an eye on

• Pay-per-mile tax (eVED) still starts in April 2028 at 3p a mile for electric cars and 1.5p for plug-in hybrids, with new tools to make it easier to manage.
• Public and workplace charging stays at 20% VAT, and the government is changing the law to make that official.
• The National Living Wage rises to £13.21 an hour from 1 April 2027, which matters for salary sacrifice eligibility.

Company car tax: now set until 2031

If you drive an EV through salary sacrifice, benefit-in-kind (BiK) tax is part of what the car costs you each month. It's paid through your payslip as income tax, separately from the salary you sacrifice. It's worked out as a percentage of the car's list price, and for electric cars that percentage is tiny compared with petrol or diesel. (New to BiK? Our benefit in kind guide explains how it works.)

Until this Budget, rates were only set up to 2029/30. The Budget added the next year to the table, and the new rate will be written into law in the Finance Bill 2026-27. Here's what each rate means each month on an electric car with a £40,000 list price:

Illustration only. It uses the list price with no options, and your own figure depends on your car and tax band.

Every other band goes up by one percentage point in 2030/31 too. Plug-in hybrids emitting 1 to 50g CO2/km move from 19% to 20%, and petrol and diesel cars top out at 40% (Source: Budget 2026, GOV.UK; Taxation of company cars policy paper).

Why one extra year matters so much

Many salary sacrifice agreements run for three or four years. Before the Budget, anyone signing a four-year agreement was signing up to a final few months with no published tax rate.

Just before the Budget, our founder and CEO Steve Tigar told Fleet News that some drivers had delayed four-year agreements because of that "blindspot" in the final six months. As he put it, "That doesn't build customer confidence."

That gap is now filled. If your agreement starts before 6 April 2027, every year of a four-year term now has a published BiK rate. If it starts later, the final months fall into 2031/32, which hasn't been set yet.

It isn't the 9% that many in the industry had asked the government to hold. But a one-point step is a small, predictable rise, and electric cars are still taxed at a fraction of the rate most petrol and diesel cars pay.

What 10% actually costs you

On that £40,000 electric car, the new one-point rise adds £6.67 a month for a basic-rate taxpayer and £13.33 a month for a higher-rate taxpayer, compared with 2029/30.

For comparison, a petrol car with the same list price emitting 130g/km is on a 32% rate in 2026/27, which would cost a higher-rate taxpayer about £427 a month in BiK tax, and petrol rates are rising too.

Remember, BiK is only one part of the sum. The main saving with salary sacrifice comes from paying for your car out of your salary before income tax and National Insurance, and the Budget didn't raise the headline rates of either.

What it means for you: if you're getting an EV through salary sacrifice in the next few months, you can now see the BiK rate for every year of a typical agreement.

Used electric cars: no change

Before the Budget, Fleet News reported that HMRC was considering a lower BiK rate for used EVs. It didn't happen. Used electric cars are still taxed on their original list price when new, not what they're worth today.

Pay-per-mile tax (eVED): same rate, clearer plan

The rate hasn't changed. From April 2028, Electric Vehicle Excise Duty (eVED) will be 3p a mile for fully electric cars and 1.5p a mile for plug-in hybrids, on top of standard road tax, rising with inflation after that. It applies to every electric car and plug-in hybrid, however you get it, salary sacrifice included.

Here's what it adds up to:

At the 2028/29 rate, before any inflation rise.

It doesn't tip the balance back towards petrol, either. Charging at home works out at around 7p a mile. Add the 3p charge and it's still around 10p a mile, against around 20p a mile for a petrol car doing roughly 35mpg.

What's new is how it will work. The government says it will:

• launch a mileage estimation tool in April 2028, to help you work out what you'll owe
• build an opt-in service called eVED Connect, so your car can share its mileage automatically and you don't have to report it yourself
• introduce an automated refunds system by 2030, for example if you overestimate your miles or sell the car
• publish guidance for fleet operators later this year

Want your own number? Try our pay-per-mile tax calculator. Pop in your commute or your annual mileage and it does the maths for you.

What it means for you: a four-year agreement signed today will run past April 2028, so it's worth factoring 3p a mile into your running costs now. The more miles you do, the more you'll notice it.

Charging: a bit more help, with one catch

Home charging

The temporary 0% VAT on household electricity, which started on 1 October 2026, has been extended by three months to 1 July 2027. It currently applies in Great Britain and is expected to apply UK-wide from April 2027. If you charge at home, your cheapest way to charge stays a little cheaper for a little longer. (Looking to cut costs further? Here's our guide to the best EV tariffs in the UK.)

One to watch: the government plans to reform electricity standing charges, with details due next year. How bills are split between the standing charge and the price per unit could make a difference if you charge at home.

Public and workplace charging

This is the catch. The government is legislating to confirm that electricity from public and workplace charge points is charged at the standard 20% VAT, not the lower home rate, from 1 November 2026. It isn't a new charge, as public charging was already taxed at 20%, but it does mean there's no VAT cut on public charging for now.

Help for drivers without a driveway

There is more support coming for people who charge on the street. From spring 2027, £100 million over two years will go into cutting the cost of local, lower-powered public chargers. The government says that's worth around £150 a year to an average driver without home charging who charges on-street.

A new taskforce will also explore letting drivers use their home electricity tariff at those local chargers, following an independent review of public charging costs published alongside the Budget. It's early days and the government admits it's complex, but it's a promising idea.

Separately (this one wasn't part of the Budget), since 21 October households in England no longer need planning permission for a qualifying cross-pavement charging channel, which the government says can save up to £300 on installation. You'll still need your council's go-ahead for work on the pavement itself. Our guide to EV charging without a driveway has the details.

What it means for you: charging at home is still the cheapest option by far. If you rely on public chargers, help is on the way, but not until spring 2027.

What the Autumn Budget 2026 means for employers

For businesses offering EV salary sacrifice, very little changes, and what does change is predictable.

• Salary sacrifice for cars is untouched. The cap on pension salary sacrifice announced at Budget 2025 (from April 2029) only applies to pensions. EV salary sacrifice carries on as before, employer National Insurance savings included.
• The National Living Wage rises 3.9% to £13.21 an hour from 1 April 2027, and the rate for 18 to 20-year-olds rises to £11.27. A salary sacrifice can't take anyone's pay below the minimum wage, so the salary needed to qualify will tick up slightly from April. We're updating our eligibility checks with the new rates, so you don't need to work it out yourself.
• Payrolling of company car benefits becomes mandatory from 6 April 2027. If you're not already reporting car benefits through payroll, it's worth getting ready. Our team can talk you through what it means for your scheme.
• BiK is now published to April 2031, which makes it easier to explain the full cost of a four-year agreement to your team.

Thinking about offering salary sacrifice for the first time? Here's how to set up an EV salary sacrifice scheme.

Other motoring changes in the Budget

None of these change how EV salary sacrifice works, but they're useful to know.

• Fuel duty: the 5p-a-litre cut is extended to 1 July 2027, and the planned inflation rise is pushed back to the same date. That gives drivers some breathing space, but pump prices are still high. The Budget says petrol prices in the UK rose 33% between February and October 2026, and filling a typical 55-litre tank now costs around £24 more for petrol and £32 more for diesel than before the conflict in the Middle East began. It's a good reminder of why EVs and charging at home look such good value.
• ZEV mandate: the government aims to respond to its consultation on the Zero Emission Vehicle mandate by the end of 2026.

What the Budget didn't change

Sometimes the most useful news is what stayed the same.

• Salary sacrifice for cars. No changes at all. The £2,000 cap on National Insurance relief from April 2029 applies to pension salary sacrifice only.
• Used electric cars. Company car tax is still charged on a car's original list price, however old it is.
• Pay-per-mile tax. Some in the industry had pushed back on eVED, but it's going ahead as planned, with the rates unchanged.
• The Expensive Car Supplement. Electric cars with a list price over £50,000 still pay an extra £440 a year in road tax, for five years from the second time the car is taxed. Electric cars registered before 1 April 2025 don't pay it (Source: GOV.UK vehicle tax rates). With loveelectric, road tax is included in your monthly payment, so you won't see a separate bill.

Our view: the certainty we asked for, if not the rate

We went into this Budget with two asks. As our founder and CEO Steve Tigar told Fleet News the week before, we wanted the BiK rate for electric cars held at 9% for a couple more years, and a lower rate for used EVs. Neither happened, so it isn't the outcome we pushed for. Steve had warned that a rate above 9%, alongside pay-per-mile tax from 2028, risked sending a confusing signal to drivers thinking about switching, and both are now on the way.

But the Budget did fix the problem we were seeing day to day. We show every driver what their BiK will be in each tax year of their agreement, and with no rate to show for the final months of a four-year deal, some people understandably held off. That gap is now closed, and a one-point rise is a modest, predictable step rather than a shock.

Where we think the government missed a trick is used EVs. A three-year-old electric car is still taxed on its price when new, which makes a cheaper route into electric less appealing than it should be. As Steve put it before the Budget, when the cost of going electric rises, the evidence points to people choosing a used petrol or diesel car instead, not a cheaper EV. We'll keep making the case for a used EV rate, and for rates to be set further ahead, because anyone starting a four-year agreement after April 2027 will run into the same blind spot again.

Our bottom line for drivers: the maths still works. On a £40,000 electric car, the new 2030/31 rate adds at most £13.33 a month, while the average loveelectric driver saves just shy of £300 a month through salary sacrifice.

Waiting for the Budget? It's done

If you were holding off until after the Budget, there's a lot less guesswork than there was a few weeks ago. BiK rates are set to 2031, pay-per-mile is unchanged, and the way salary sacrifice saves you money hasn't moved.

The first step is finding out whether salary sacrifice is open to you (or, if you're in HR, to your team).

Check your eligibility

Autumn Budget 2026: frequently asked questions

What did the Autumn Budget 2026 change for electric cars?

The main change was setting company car tax for 2030/31: 10% for electric cars, up from 9% in 2029/30. The Budget also confirmed more detail on how the pay-per-mile tax will work, extended 0% VAT on home electricity to 1 July 2027 and announced £100 million to cut the cost of local public chargers.

What is the BiK rate for electric cars in 2030/31?

10%. The rates before that are unchanged: 4% in 2026/27, 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30.

Did the Budget change salary sacrifice for electric cars?

No. EV salary sacrifice works exactly as before, and the Budget didn't raise the headline rates of income tax or National Insurance, so the saving from paying for your car before tax is unchanged.

Does the pension salary sacrifice cap affect EV salary sacrifice?

No. The £2,000 cap announced at Budget 2025 applies only to pension contributions made through salary sacrifice. It doesn't affect cars.

When does the pay-per-mile tax start, and how much is it?

April 2028. It's 3p a mile for fully electric cars and 1.5p a mile for plug-in hybrids, rising with inflation after that. At around 7,100 miles a year, that's about £17.75 a month for an electric car.

Is VAT on public EV charging going up?

No. Public and workplace charging was already charged at 20% VAT. The Budget confirms it stays at 20%, rather than moving to the lower home rate.

Will my monthly salary sacrifice payment change because of the Budget?

Not because of the Budget. It didn't change any of the BiK rates already set, so the yearly steps you were already expecting (4% now, rising to 9% by 2029/30) stay the same. If your agreement runs into 2030/31, the new 10% rate applies from that tax year.

Sources

• HM Treasury, Budget 2026, 28 October 2026
• HMRC, Taxation of company cars: the appropriate percentage for tax years 2030 to 2031 and 2031 to 2032, 28 October 2026
• Fleet News, Calls for clarity on BIK as drivers delay salary sacrifice sign-up, 26 October 2026
• GOV.UK, Drivers to save up to £300 when installing EV chargers at home, as government slashes unnecessary red tape, 21 October 2026
• HMRC, Work out the appropriate percentage for company car benefits (480: Appendix 2), accessed 2 November 2026
• GOV.UK, Vehicle tax rate tables, accessed 2 November 2026

This article is general information, not tax advice. Figures are correct as of 2 November 2026.

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