Electric Company Car Benefit-in-Kind: The Rates Through 2029/30 and What They Cost

A fully electric car is still, by some distance, the cheapest vehicle a property company can put in front of a director. That has not stopped the Treasury from raising the tax on it, year after year, on a schedule set out years in advance. For 2026/27 the rate has moved to 4%, and it keeps climbing every year to 2029/30. None of this is a surprise if you have been watching the numbers, but plenty of directors still order a company car on the rate they remember from when they last checked.

How company car tax actually works

A company car is taxed as a benefit in kind on a percentage of its list price (the P11D value), known as the appropriate percentage. That percentage is set mainly by CO2 emissions and, for hybrids, electric range. The resulting cash equivalent value is added to the director's income and taxed at their marginal rate of Income Tax, and the company separately pays Class 1A National Insurance at 15% on the same figure, alongside the employer NIC changes covered in our guide to employer NIC and the Employment Allowance. There is no NIC exemption for going electric; the saving comes entirely from the much lower appropriate percentage.

The electric car schedule, year by year

Unlike most reliefs on this site, which get extended or cut Budget by Budget, the appropriate percentage for zero-emission cars has already been legislated out to 2029/30:

• 2024/25: 2%
• 2025/26: 3%
• 2026/27 (current year): 4%
• 2027/28: 5%
• 2028/29: 7%
• 2029/30: 9%

Petrol, diesel and hybrid cars run on a much steeper scale that already reaches up to 37% of list price depending on CO2 emissions, rising by a further point a year over the same period. From 2028/29, hybrids also lose the extra discount they currently get for electric range, and are taxed purely on CO2 like a conventional petrol or diesel car. The gap between electric and combustion is narrowing at the edges, but it is not closing.

What it actually costs, in numbers

Take a £45,000 electric car provided to a higher-rate director. At the 2026/27 rate of 4%, the taxable benefit is £1,800 a year. The director pays Income Tax on that at 40%, or £720 a year, and the company pays Class 1A NIC at 15%, or £270 a year. Roll forward to 2029/30 and the same car, at 9%, produces a taxable benefit of £4,050: £1,620 in personal tax and £607.50 in Class 1A NIC. The employer and personal cost both more than double over three years, purely from the scheduled rate rise, with no change to the car itself.

Compare that with the equivalent combustion car. A typical mid-range petrol company car sits around the 25% to 30% band. On the same £45,000 list price at 28%, the taxable benefit is £12,600, more than three times the electric car's 2029/30 figure and seven times its 2026/27 figure. Even at the top of its legislated climb, an electric car remains the clearly cheaper company vehicle.

The capital allowances side is separate, and less generous for used stock

Benefit-in-kind tax is only half the picture; the company's own relief on buying the car is the other half. A new and unused zero-emission car can qualify for a 100% first-year allowance, giving full Corporation Tax relief on the purchase in the year of acquisition. That relief has been extended by successive Budgets rather than made permanent, so the current expiry date should always be checked before a purchase is committed to, in the same way our guide to capital allowances on EV chargepoints and solar equipment flags for chargepoint relief. A second-hand electric car does not qualify for the 100% first-year allowance at all; it goes into the main capital allowances pool and is written down at the standard 18% reducing-balance rate, the same as most other plant and machinery.

What this means for a director choosing a car now

The direction of travel is clear and has been for a while: electric company car tax is rising every year through the rest of this decade, by design, as part of the same broader push to narrow gaps between different forms of remuneration that runs through the dividend tax rise from April 2026 and the reclassification of double cab pickups as cars rather than vans. None of that changes the basic conclusion for now: at 4% against a combustion scale running to 37%, an electric car is still one of the most tax-efficient benefits a property company can provide. It simply will not stay this cheap forever, and a car ordered on a four or five-year lease today will run straight through several of the scheduled increases, so it is worth costing the whole term, not just this year's rate, before signing. Directors who provide company cars alongside other benefits should also check where those benefits sit once mandatory payrolling of benefits in kind takes effect from April 2027, since it changes how and when the tax is collected, not how much is due.

Common questions

What is the company car benefit-in-kind rate for electric vehicles in 2026/27?

For the 2026/27 tax year, a fully electric company car is taxed on 4% of its list price as a benefit in kind. The rate was 2% in 2024/25 and 3% in 2025/26, and is scheduled to rise to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30.

Will the electric company car tax rate keep rising?

Yes. HM Treasury has already legislated the appropriate percentage for electric cars through to 2029/30, rising by one percentage point a year until 2027/28 and then by two points a year to reach 9% in 2029/30. Unlike some reliefs, this schedule is fixed rather than announced year by year.

Does a company still pay National Insurance on an electric company car?

Yes. The company pays Class 1A National Insurance at 15% on the same cash equivalent value used to tax the director personally. There is no NIC exemption for electric vehicles, so the employer cost rises in step with the appropriate percentage each year.

Is it still cheaper to run an electric car through a property company than a petrol car?

Generally yes, and by a wide margin. Petrol and diesel company cars are taxed on a scale that runs up to 37% of list price depending on CO2 emissions, compared with 4% for a pure electric car in 2026/27. Even after the scheduled rises to 9% by 2029/30, an electric car remains far cheaper as a benefit in kind than the equivalent combustion car.

This article is general information, not personal tax advice, and tax rules change. Your own position depends on facts we cannot see from here — please take advice before acting on anything above.

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