Company car tax 2026/27 to 2029/30: EV rates, hybrids and 3p a mile

Electric cars on salary sacrifice have become one of the most popular perks in UK workplaces. The reason is the benefit-in-kind (BIK) rate: you pay tax on a small percentage of the car's list price, which is far less than the salary you give up. That percentage is now rising each year.

The rates

CO2 and electric range	2026/27	2027/28	2028/29	2029/30
0g/km (fully electric)	4%	5%	7%	9%
1 to 50g/km, 130+ miles	4%	5%	18%	19%
1 to 50g/km, 70 to 129 miles	7%	8%	18%	19%
1 to 50g/km, 40 to 69 miles	10%	11%	18%	19%
1 to 50g/km, 30 to 39 miles	14%	15%	18%	19%
1 to 50g/km, under 30 miles	16%	17%	18%	19%
51 to 54g/km	17%	18%	19%	20%

Petrol and diesel cars rise by 1 percentage point per 5g/km, up to a maximum of 37% until 2027/28, then 38% in 2028/29 and 39% in 2029/30. Diesels that do not meet the RDE2 standard pay a 4% supplement, within the same maximum.

From 2028/29 the electric range bands for hybrids disappear, and every car between 1 and 50g/km pays the same rate. That is a big jump for long-range plug-in hybrids.

The plug-in hybrid easement

Newer plug-in hybrids tested under the Euro 6e-bis standard often show CO2 above 50g/km, which would push them into much higher bands. The Budget 2025 easement treats plug-in hybrids first registered from 1 January 2025 under Euro 6e-bis or later, with CO2 of 51g/km or more and at least 1 mile of electric range, as if they emitted 1g/km. Their electric range then sets the rate.

The easement runs until 5 April 2028, with transitional cover to 5 April 2031 for cars made available by then.

What it costs in tax

BIK tax is the list price, times the BIK rate, times your income tax rate. For a £45,000 electric car:

Tax year	BIK rate	Basic rate taxpayer	Higher rate taxpayer
2026/27	4%	£360 a year	£720 a year
2027/28	5%	£450 a year	£900 a year
2028/29	7%	£630 a year	£1,260 a year
2029/30	9%	£810 a year	£1,620 a year

The rate is set by the tax year, so a lease signed today will be taxed at 7% in 2028/29.

A worked example

Take someone earning £60,000 who sacrifices £500 a month for an electric car with a £40,000 list price. In 2026/27:

• The taxable benefit is £1,600 a year (4% of £40,000).
• Tax on that benefit is about £53.33 a month.
• After the income tax and National Insurance saved on the sacrificed salary, their income falls by £343.33 a month.

Paying £500 a month for the same car on a personal lease, out of taxed pay, would cost £1,880 more over the year. The scheme effectively gives a 31% discount.

Salary sacrifice rules for higher-emission cars

Optional remuneration rules normally tax you on the higher of the benefit and the salary given up. Cars emitting 75g/km or less are exempt, which is why electric cars and most plug-in hybrids keep their low BIK on salary sacrifice. A petrol or diesel car above 75g/km would usually be taxed on the full sacrifice.

Pay-per-mile from April 2028

Electric cars are due to start paying a per-mile charge, called eVED, from 1 April 2028. Rates reported from the July 2026 consultation response are 3p a mile for electric cars and 1.5p for plug-in hybrids. These figures come from the consultation response as reported at the time of writing, so check the final rules before relying on them. At 3p, 10,000 miles a year would cost £300.

What to do now

1. Run any quote through our EV salary sacrifice calculator with your own salary, list price and personal lease comparison.
2. Check which years a lease covers and price in the rising BIK rate for each year.
3. If you are looking at a plug-in hybrid, check its registration date and emissions standard to see whether the easement applies, and remember the jump in 2028/29.
4. Ask whether your scheme includes insurance and servicing, as that changes the comparison with a personal lease.