Answers · UK 2025/26

Is a company car worth it in 2026?

A company car is usually worth it for electric vehicles, where Benefit-in-Kind tax is just 3% in 2026/27, but rarely for petrol or diesel cars taxed at up to 37%. A higher-rate driver in a £40,000 EV pays only about £480 a year, versus several thousand for a comparable petrol model.

Last updated: 1 June 2026Last reviewed: 1 June 2026How we verify

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Whether a company car pays off depends almost entirely on CO2 emissions, because Benefit-in-Kind (BiK) tax is based on the car list price multiplied by a percentage tied to emissions. For 2026/27, fully electric cars carry a very low BiK rate of around 3%, while petrol and diesel cars range up to 37%. Worked example, EV: a £40,000 electric car at 3% gives a taxable benefit of £1,200; a 40% taxpayer pays £480 a year, a basic-rate driver £240 — exceptional value, especially as the employer covers the car, insurance and often charging. Worked example, petrol: a £40,000 petrol car at 30% gives a £12,000 benefit; a 40% taxpayer pays £4,800 a year, making it far less attractive than taking a car allowance and buying privately. You also pay BiK on free fuel for private mileage, which is often not worth taking. Salary sacrifice EV schemes add further savings by reducing Income Tax and National Insurance. The rules and rates apply UK-wide, including Scotland, where the BiK is taxed at Scottish Income Tax rates. Use the Company Car Tax calculator to compare a specific vehicle against a cash alternative.