Hybrid vs Electric Company Car Benefit-in-Kind Tax: 2026/27 Comparison
A fully electric company car currently attracts one of the lowest Benefit-in-Kind (BIK) tax percentages of any vehicle type, while a plug-in hybrid's BIK percentage depends on a combination of its CO2 emissions and how far it can travel on electric power alone. This guide compares how the two are taxed for 2026/27 and where to find the exact current percentage for a specific vehicle.
Key facts for 2026/27
- Benefit-in-Kind tax on a company car is calculated as the car's P11D list price multiplied by a percentage banded according to CO2 emissions (and, for hybrids, electric-only range), with the resulting figure taxed at the employee's marginal Income Tax rate — 20%, 40% or 45% for 2026/27.
- Fully electric company cars are taxed on a specific, very low BIK percentage band that has been rising gradually year on year since 2025/26 as part of a multi-year schedule announced by HMRC — always check the current HMRC company car tax tables or use HMRC's official calculator for the exact percentage applying in 2026/27, since this comparison does not restate the specific figure.
- Plug-in hybrid company cars are banded using a table that considers both their CO2 emissions figure (grams per kilometre) and their zero-emission electric-only range in miles — broadly, a longer electric range attracts a lower BIK percentage within a given CO2 band, and a shorter range attracts a higher one, though the exact banding structure should be checked against current HMRC tables.
- The employer pays Class 1A National Insurance on the same cash value of the Benefit-in-Kind, at the standard employer NI rate of 15% for 2026/27 — this cost falls on the employer, not the employee, but often influences which vehicles an employer is willing to offer through a company car scheme.
- Both fully electric and plug-in hybrid company cars are typically far cheaper in Benefit-in-Kind terms than an equivalent petrol or diesel car with the same list price, though the precise gap depends on the specific CO2 and electric range figures of the models being compared.
Side-by-side comparison
| Feature | Plug-in Hybrid Company Car | Fully Electric Company Car |
|---|---|---|
| BIK banding basis | CO2 emissions and electric-only range combined | A single, very low percentage band for zero-emission vehicles |
| Typical BIK percentage level | Meaningfully higher than pure electric, varying by specific CO2/range combination — check current HMRC tables | One of the lowest percentage bands available for any vehicle type |
| Trend since 2025/26 | Banded rates for hybrids are broadly stable relative to the multi-year EV schedule — check current tables | Rising gradually year on year under a multi-year schedule announced by HMRC |
| Employer Class 1A NIC | Paid at 15% of the BIK cash value for 2026/27 | Paid at 15% of the (lower) BIK cash value for 2026/27 |
| Fuel cost exposure | Still needs petrol/diesel for longer trips beyond the electric-only range | Fully dependent on charging infrastructure and electricity cost |
| Typical vehicle choice range | Wide — many mainstream manufacturers offer plug-in hybrid variants | Growing rapidly, but still narrower at some price points than hybrid/petrol |
| Employee take-home cost impact | BIK taxed at 20%/40%/45% of a moderate benefit value | BIK taxed at 20%/40%/45% of a very low benefit value |
How Benefit-in-Kind bands work for hybrids and electric cars
Company car Benefit-in-Kind tax starts from the car's P11D value (broadly, its list price including delivery and most standard options, but excluding the first registration fee and road tax), which is then multiplied by a percentage set by HMRC according to the car's CO2 emissions. For plug-in hybrids specifically, HMRC's table refines this further by also considering the car's zero-emission electric-only range in miles: within a given CO2 emissions band, a hybrid with a longer electric-only range attracts a lower BIK percentage than one with a shorter range, on the basis that it is capable of more genuinely zero-emission driving.
Fully electric cars, having zero tailpipe CO2 emissions, sit in their own dedicated (and currently very low) BIK percentage band. HMRC has published a multi-year schedule showing this percentage rising gradually each tax year from 2025/26 onward, reflecting the end of the very lowest introductory rates used to encourage early EV adoption, while still keeping electric vehicles significantly cheaper in Benefit-in-Kind terms than almost any other vehicle type.
Because both the hybrid banding table and the electric vehicle percentage schedule are detailed and change from year to year, this comparison does not restate the specific percentages — use HMRC's official company car tax calculator, or check the current tables directly, to get the exact BIK percentage for a specific vehicle's CO2 figure, electric range, and tax year.
How to compare the actual cost of each option
To compare a specific plug-in hybrid and a specific fully electric car on a like-for-like basis, you need three figures for each vehicle: the P11D list price, the applicable BIK percentage for the tax year (found from the current HMRC table using the car's CO2 emissions and, for hybrids, electric range), and your own marginal Income Tax rate. Multiplying the P11D value by the BIK percentage gives the taxable benefit, and multiplying that by your marginal rate (20%, 40% or 45% for 2026/27) gives your actual annual tax cost.
Because electric cars currently sit in a much lower BIK percentage band than almost any plug-in hybrid, a fully electric car with a similar list price to a hybrid alternative will typically produce a substantially lower annual Benefit-in-Kind tax bill for the employee, even though both are far cheaper than an equivalent petrol or diesel model.
Employers should also factor in their own Class 1A National Insurance cost, paid at the standard rate on the same taxable benefit value — a lower BIK value for an electric car therefore also reduces the employer's NI cost relative to offering an equivalent hybrid.
Choosing between a hybrid and fully electric company car
A plug-in hybrid can suit drivers who need the flexibility of a petrol or diesel engine for longer journeys or in areas with limited charging infrastructure, while still benefiting from a lower BIK percentage than a conventional petrol or diesel car of similar emissions, thanks to its electric-only range.
A fully electric car will almost always produce a lower Benefit-in-Kind tax bill than a comparable plug-in hybrid, given the current gap between the two BIK banding structures, making it the more tax-efficient choice for drivers who can manage with electric-only range and reasonable access to charging.
Because the exact numbers depend heavily on the specific vehicle's CO2 emissions and electric range, and on the current tax year's percentage tables (which change annually for both categories), always run the actual figures for the specific cars under consideration using HMRC's official calculator before deciding.
Verdict
Fully electric company cars currently carry a substantially lower Benefit-in-Kind tax percentage than plug-in hybrids, making them the more tax-efficient choice for most employees where electric-only driving is practical.
Plug-in hybrids still offer a meaningful tax advantage over conventional petrol or diesel cars, particularly models with a longer electric-only range, and remain a sensible choice for drivers who need the flexibility of a combustion engine for longer journeys.
Because both the hybrid banding table and the electric vehicle BIK schedule change from year to year and depend on a specific vehicle's exact CO2 and range figures, always check HMRC's current company car tax tables or use its official calculator before comparing specific vehicles for 2026/27.