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Company car tax

Electric company cars

Vehicle excise duty on an electric car caught up with everything else in April 2025. Benefit in kind has not, and that is where the whole advantage now sits.
4%
Appropriate percentage, 2026/27
HM Revenue and Customs, Work out the appropriate percentage for company car benefits (480: Appendix 2) (as of 6 April 2026)
£720
Tax a year on a £45,000 EV, higher rate
HM Revenue and Customs, Work out the appropriate percentage for company car benefits (480: Appendix 2) (as of 6 April 2026)
£5,040
Saved against a 130 g/km petrol
HM Revenue and Customs, Work out the appropriate percentage for company car benefits (480: Appendix 2) (as of 6 April 2026)

Checked on 7 September 2026.HM Revenue and Customs, Work out the appropriate percentage for company car benefits (480: Appendix 2) (as of 6 April 2026)

How much company car tax do you pay on an electric car?

In 2026/27 a zero emission car is charged at 4 per cent of its P11D value. On a £45,000 car that is a taxable benefit of £1,800, costing a higher rate taxpayer £720 a year.

The equivalent petrol car at 130 g/km is charged at 32 per cent, which is why the same money buys a much better car when the employer is providing it.

The same £45,000 car, two fuels

Benefit in kind on a £45,000 car at the higher rate, 2026/27
CarAppropriate percentageTaxable benefitTax a year
Zero emission4%£1,800£720
Petrol, 130 g/km32%£14,400£5,760

The plug in hybrid trap

Appropriate percentage for a car emitting 1 to 50 g/km, 2026/27
Electric only rangeAppropriate percentageTax a year on £45,000, higher rate
130 miles and above4%£720
70 to 129 miles7%£1,260
40 to 69 miles10%£1,800
30 to 39 miles14%£2,520
Under 30 miles16%£2,880

The range on the certificate of conformity is the one that counts, not what the car does in February. Two plug in hybrids with the same CO2 figure and the same list price can be four times apart on tax purely on that number.

What happens after 2027/28

  • Zero emission cars rise by two percentage points a year rather than one, reaching 7 per cent in 2028/29 and 9 per cent in 2029/30.
  • Cars emitting 1 to 50 g/km lose the electric range split and move to a flat 18 per cent in 2028/29. For a long range plug in hybrid that is a very large jump in one step.
  • The overall cap rises to 38 per cent and then 39 per cent.
  • Even at those figures a zero emission car remains far cheaper to be given than a petrol one, which is the whole point of the schedule.

Common questions

How much is company car tax on an electric car?
In 2026/27 the appropriate percentage for a zero emission car is 4 per cent. On a £45,000 car that is a taxable benefit of £1,800, which costs a higher rate taxpayer 40 per cent of it.
Is a plug in hybrid nearly as good?
Only if its electric range is long. Cars emitting 1 to 50 g/km are banded by electric only range, so a plug in hybrid with 130 miles is charged like an electric car and one with 25 miles is charged four times as much on the same list price.
Do the electric rates keep rising?
Yes, and faster from 2028. A zero emission car goes up a point a year through 2027/28, then two points a year, reaching 9 per cent in 2029/30. That is still a fraction of what a petrol car is charged.
Is there a fuel benefit charge on an electric company car?
No. Electricity is not a fuel for the car fuel benefit charge, so an employer paying to charge a company electric car does not create a taxable fuel benefit the way paying for petrol does.

Sources

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