Last reviewed: November 2026
An electric company car is still the most tax-efficient car a limited company can provide. The benefit-in-kind (BIK) rate is 4% for 2026/27, rising by small steps to 9% by 2029/30, compared with 25% to 37% for most petrol and diesel cars.
| Tax year | Electric car BIK rate |
|---|---|
| 2026/27 | 4% |
| 2027/28 | 5% |
| 2028/29 | 7% |
| 2029/30 | 9% |
Example: a £40,000 electric car has a taxable benefit of £1,600 in 2026/27. A higher-rate taxpayer pays £640 a year in tax on it.
Plug-in hybrids
Low-emission hybrids are taxed at similar rates until 2027/28, but rates jump to 18% or more from 2028/29. Check carefully before choosing a hybrid on a long lease.
For the company
- A new electric car can qualify for a 100% first-year allowance.
- Charging at work is tax-free for employees.
- The company pays Class 1A National Insurance on the benefit.
Thinking about a company car? We’ll compare the company and personal options for you. Get in touch.
Sources: Clive Owen – Company car benefit changes.