by Asim Abbas
11 November 2026 
Company car tax 2026/27: BIK rates for electric, hybrid and petrol cars
Company car tax 2026/27: BIK rates for electric, hybrid and petrol cars
If your employer or your own company provides a car you can use privately, it’s a taxable benefit in kind.
- Electric car BIK: 4% in 2026/27
- Rises to 5%, then 7% and 9% by 2029/30
- Petrol and diesel up to 37%
- Employer pays 15% Class 1A NI on the benefit
Electric cars remain far cheaper than petrol or diesel, although their BIK rate is rising by one percentage point a year, then faster from 2028.
This guide sets out the 2026/27 rates, a worked example and whether a company car makes sense for a director.
How company car tax works
The taxable benefit is the car’s list price, including options, multiplied by the BIK percentage. You pay Income Tax on that at your marginal rate. Your employer pays Class 1A National Insurance at 15% on the same amount.
Electric car rates
| Tax year | Zero-emission BIK |
|---|---|
| 2025/26 | 3% |
| 2026/27 | 4% |
| 2027/28 | 5% |
| 2028/29 | 7% |
| 2029/30 | 9% |
Hybrids with emissions of 1 to 50g/km are taxed based on electric range, while petrol and diesel cars go up by CO2 to a maximum of 37%. Diesels not meeting RDE2 standards pay a 4% supplement, within the 37% cap.
Salary after tax calculator
See the effect on take-home pay.
Asha, a higher rate taxpayer, has an electric company car with a list price of £45,000. The benefit in 2026/27 is 4% of £45,000, £1,800. Her tax is £720 a year, £60 a month. Her employer pays Class 1A NI of £270. A petrol car at the same price with 30% BIK would cost her £5,400 a year.
Company cars for directors
For a director with their own company, an electric car can be very efficient:
- The company can claim 100% first-year allowance on a new zero-emission car, currently until April 2027
- Charging at work is tax-free
- Running costs paid by the company are covered by the BIK
- Sale proceeds later are taxable for the company
Petrol and diesel cars rarely make sense as company cars now. Many directors instead own the car personally and claim 45p a mile for business journeys.
Fixed-fee accountancy support
Transparent monthly packages for sole traders, landlords and limited companies. Fixed fees agreed upfront, VAT included.
Get a fixed-fee quoteCall 0161 531 4179Fuel benefit
If the company pays for private fuel in a petrol, diesel or hybrid car, an additional fuel benefit applies, based on a fixed amount multiplied by the car’s BIK percentage. It’s usually expensive, so it often makes sense to repay private fuel. There’s no fuel benefit for electricity.
Reporting
Benefits are reported on P11D by 6 July, or through payroll. From April 2027, most benefits, including company cars, must be payrolled. See our guide to P45, P60 and P11D.
Salary sacrifice electric cars
Many employers offer EVs through salary sacrifice, saving tax and NI on the lease cost. Check the impact on pension and mortgage applications. See our salary sacrifice guide.
Read HMRC’s guidance on tax on company cars, or ask our limited company team before buying a car through your company.
What should I do next?
Including options.
BIK difference is big.
Avoid fuel benefit.
Frequently Asked Questions
What is the BIK rate for electric cars in 2026/27?
4%.
Will EV company car tax rise?
Yes, to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30.
Is a company car worth it for a director?
An electric car often is. Petrol and diesel rarely are.
Is there a fuel benefit for electric cars?
No. There is no fuel benefit charge for electricity.
Who pays Class 1A NI on company cars?
The employer, at 15% of the benefit.
Need help with this? Wingate Accountants offers fixed-fee online accountancy support across the UK. Call 0161 531 4179 or request a quote at wingateaccountants.co.uk.
About the Author
Stephen Reynold
I’m Stephen Reynold, an accountant at Wingate Accountants. I work with sole traders and small companies, turning tax rules into clear, practical next steps.
