Chris Joyce, managing director of Sogo Mobility, looks at what changing vehicle taxation means for salary sacrifice.

With Benefit-in-Kind (BiK) rates rising and wider vehicle tax changes now working their way through the market, it is no surprise that some fleets are taking another look at their salary sacrifice schemes. That is sensible, and tax changes always deserve scrutiny.

The fundamentals behind salary sacrifice, particularly for electric vehicles, remain very strong. The numbers are changing, but the overall direction has not. From April 2026, the Benefit-in-Kind rate for electric vehicles increased from 3% to 4%. It then moves to 5% in April 2027, with the Government setting out a path to 9% by 2029.

Those increases matter, drivers will notice them, and fleet teams should build them into future modelling. But they are gradual, and they still leave electric vehicles in a far stronger position than petrol or diesel cars, where BiK rates typically sit between 26% and 37%.

Even as EV BiK rates rise, the tax burden remains significantly lower than for internal combustion engine vehicles. When that advantage is combined with salary sacrifice, the financial case still holds up well.

Employees can reduce income tax and National Insurance contributions, while employers can cut their own National Insurance costs. At the same time, businesses can support recruitment, retention and sustainability targets without having to build an entirely separate benefit from scratch.

There is another factor that should not be overlooked: certainty.

Household budgets are still under pressure. Drivers are paying close attention to monthly costs, not just headline prices. A salary sacrifice arrangement gives them a fixed monthly deduction that can include maintenance, insurance and other running costs. That makes budgeting easier, particularly at a time when unexpected costs are harder to absorb.

This is not just a tax conversation; it’s also about affordability. Recent demand suggests drivers and employers are seeing the same picture. Rising fuel prices have brought the total cost of ownership back into sharper focus. Lower energy and maintenance costs remain a clear advantage for EVs, especially where the right vehicle is matched to the right usage pattern.

At Sogo Mobility, electric vehicle enquiries were up 30% year-on-year in June. That reflects what we are hearing in the market. Employers and drivers are not walking away from EVs. They are asking more detailed questions about cost, suitability and long-term value.

Fleets also need to factor in Vehicle Excise Duty. From April 2025, electric vehicles moved into the standard VED regime, with a £200 annual charge applying after the first year of registration.

The luxury car supplement will also continue to apply between years two and six. However, for electric vehicles registered from April 2025, the threshold rises to £50,000. That will bring more EVs below the threshold and reduce the impact on many fleet choices.

These changes add cost, but they do not overturn the case for EVs. They are part of the market becoming more mature. As electric vehicles become more mainstream, it was always likely that some of the early incentives would be reduced.

What matters is whether the underlying advantage remains, and at present, it does. The wider incentive framework is still supportive, too. The availability of 100% first-year allowances on electric vehicle purchases continues to help the business case. Grants and support in areas such as light commercial vehicles also remain relevant for fleets planning investment.

There is also talk of pay-per-mile road pricing for electric vehicles from 2028. Fleets should keep an eye on it, but for most operators, it is not an immediate operational issue. It sits further out in the planning cycle.

The more immediate priority is communication. Drivers need clear information. They need to understand that BiK rates are increasing, but they also need to understand the scale of the advantage that remains. If employers only communicate the rise in tax, they risk creating unnecessary concern. If they explain the full picture, salary sacrifice remains easy to justify.

Fleet operators should also go back to the basics, review vehicle policies and refresh total cost of ownership assumptions. Make sure partners keep schemes competitive, and check that employees understand what is included and what the actual monthly cost is.

Driver education also matters. As the tax landscape becomes more detailed, employees will need straightforward guidance, not jargon. The best schemes are usually the ones where drivers understand the benefit before they enter it.

Salary sacrifice still offers a practical route into electric mobility. It helps employees access lower-emission vehicles at a more affordable monthly cost. It helps employers improve their benefits package, reduce National Insurance costs and support sustainability goals.

The tax environment is changing, but not enough to make salary sacrifice any less relevant. Fleet operators should pay attention to the details, but they should keep them in proportion. EVs still hold a clear tax advantage over petrol and diesel alternatives. Salary sacrifice remains one of the most effective ways to make that advantage accessible to drivers.

For fleets planning the next stage of transition, it remains a dependable and practical part of the mobility strategy.