Answers · UK 2025/26

How much company car tax do I pay on an electric car in 2026/27?

For 2026/27 the benefit-in-kind rate on a fully electric company car is just 4%. On a £40,000 EV that is a taxable benefit of £1,600, so a basic-rate taxpayer pays about £320 a year and a higher-rate taxpayer about £640 a year, making electric company cars very tax-efficient.

Last updated: 7 June 2026Last reviewed: 7 June 2026How we verify

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Electric company cars are taxed very lightly compared with petrol and diesel because the benefit-in-kind percentage is set by CO2 emissions, and a fully electric car emits none. For 2026/27 the benefit-in-kind rate on a battery electric vehicle is 4%. The taxable benefit is the car's list price (the P11D value) multiplied by 4%, so a £40,000 electric car gives a benefit of just £1,600 a year. You pay Income Tax on that at your marginal rate: a basic-rate taxpayer pays 20% of £1,600, about £320 a year, and a higher-rate taxpayer pays 40%, about £640 a year. This is dramatically cheaper than an equivalent petrol car, where the benefit could easily be £12,000 and the tax thousands of pounds. The EV rate has been rising gradually by one percentage point a year and is scheduled to continue increasing in later years, so the perk becomes slightly less generous over time, but it remains far below petrol and diesel rates. Salary sacrifice into an electric company car is especially attractive because you give up gross salary, saving Income Tax and National Insurance, while only being taxed on the small benefit-in-kind value. Employers benefit too: Class 1A National Insurance is charged at 15% on the low £1,600 benefit, and they can often claim enhanced capital allowances on the vehicle. There is no separate fuel benefit charge for electricity provided for an electric company car. Use the take-home pay calculator to model an electric car salary sacrifice arrangement.