Date posted: 5th May 2026
Understanding Benefit in Kind (BIK) rates for electric cars and hybrid vehicles is essential for UK employers and employees planning tax-efficient company car arrangements.
The government has confirmed company car tax rates through to the 2029/30 tax year, supporting long-term fleet and salary sacrifice planning.
BIK Rates for Electric Cars
Fully electric vehicles continue to benefit from low BIK rates, making them one of the most tax-efficient company car options in the UK.
- 2026/27: 4%
- 2027/28: 5%
- 2028/29: 7%
- 2029/30: 9%
Although rates are increasing gradually, electric company cars remain significantly more tax-efficient than petrol or diesel alternatives, which can attract much higher BIK rates.
BIK Rates for Hybrid and PHEV Cars
BIK rates for hybrid and plug-in hybrid electric vehicles are increasing more sharply, particularly for cars with CO₂ emissions between 1–50 g/km, with the minimum rates as below. These rates can be higher depending upon the electric range of the vehicle.
- 2026/27: 4%
- 2027/28: 5%
- 2028/29: 18%
- 2029/30: 19%
This significant increase reflects changes to emissions banding and reduces the tax advantages previously available for hybrid company cars.
Electric vs Hybrid Company Cars: Tax Implications
When comparing electric vs hybrid company cars, the tax gap is widening.
Electric vehicles offer:
- Lower BIK rates and income tax exposure.
- Greater certainty over future tax costs.
- Strong alignment with environmental targets.
Hybrid vehicles, while still offering some tax advantages, are becoming less attractive from a BIK perspective over time.
Planning Your Company Car Strategy
Employers should review company car policies and salary sacrifice schemes to take advantage of low electric car BIK rates.
Employees may also benefit from switching to electric vehicles to reduce personal tax liabilities.
Need advice on company car tax?
If you’re considering electric or hybrid vehicles for your business, our team can help you assess the tax implications and identify the most efficient option for your circumstances.
