3 November 2026

Company car tax on electric cars: the rates now and what's changing

Benefit-in-kind rates for electric cars and plug-in hybrids from 2026/27 to 2030/31, including the Autumn Budget 2026 changes, with a worked example.

Company car tax, or benefit in kind, is still far lower for electric cars than for petrol and diesel ones, but the rates are rising each year. Here's where they stand after the Autumn Budget on 28 October 2026.

Fully electric cars

  • 2026/27: 4%
  • 2027/28: 5%
  • 2028/29: 7%
  • 2029/30: 9%
  • 2030/31: 10%, confirmed in the Autumn Budget 2026

Plug-in hybrids (1–50g/km CO2)

In 2026/27 the rate depends on the car's electric range:

  • 130 miles or more: 4%
  • 70–129 miles: 7%
  • 40–69 miles: 10%
  • 30–39 miles: 14%
  • Under 30 miles: 16%

From 2028/29 that changes: every plug-in hybrid in this band pays the same rate, whatever its electric range: 18% in 2028/29, 19% in 2029/30 and 20% in 2030/31.

Most petrol and diesel company cars are taxed at much higher rates, up to 37% in 2026/27.

What it means in pounds

The percentage applies to the car's list price (its P11D value). For a £40,000 electric car in 2026/27:

  • Taxable benefit: 4% of £40,000 = £1,600 a year
  • A basic-rate (20%) taxpayer pays about £320 a year
  • A higher-rate (40%) taxpayer pays about £640 a year

The employer also pays Class 1A National Insurance on the same taxable value.

What to think about when choosing a car

  • Electric cars stay the cheapest company cars for tax through to 2030/31
  • Plug-in hybrids lose much of their advantage from April 2028, when the rate jumps to 18%. A three- or four-year lease taken out now will run into that.
  • A pay-per-mile charge for electric cars (eVED) has been announced from 2028, so factor that into longer agreements

Already in the wrong car?

If a plug-in hybrid or petrol lease no longer makes sense, you may not have to see the term out. Transferring the lease to another business can cost far less than an Early Termination Charge. See our guide on lease transfer or Early Termination Charge.

Rates are from published government tables and Budget announcements, and may change in future Budgets. This is general information, not tax advice: check your own position with your accountant.

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