Company car Benefit in Kind rates are now legislated all the way through to 2029/30, which is unusually far ahead and genuinely useful if you are choosing a vehicle on a three or four-year term. Electric cars climb gently. Plug-in hybrids face something quite different in April 2028, and anyone signing a four-year agreement this autumn will drive straight through it.
The rates, to 2029/30
| Tax year | Zero emission | 1-50 g/km | Maximum |
|---|---|---|---|
| 2026/27 (now) | 4% | 4% to 16%, by electric range | 37% |
| 2027/28 | 5% | 5% to 17%, by electric range | 37% |
| 2028/29 | 7% | 18% flat | 38% |
| 2029/30 | 9% | 19% flat | 39% |
The 2029/30 figures continue into later years until Parliament changes them.
The bit that catches people out
Today a plug-in hybrid is banded by how far it travels on electricity alone. A PHEV with an electric range of 130 km or more sits at 4 per cent, exactly the same as a fully electric car. That is why so many long-range PHEVs have been chosen as company cars over the last few years.
From 6 April 2028 those electric-range sub-bands are abolished. Every car emitting 1 to 50 g/km goes to a flat 18 per cent, rising to 19 per cent the following year. Electric range stops mattering for BIK purposes entirely.
What that looks like in money
Take two cars, both with a P11D value of £50,000, and a driver paying 40 per cent income tax. One is fully electric. The other is a plug-in hybrid with a 130 km electric range, so both sit at 4 per cent today.
| Tax year | Electric car | PHEV, 130 km range |
|---|---|---|
| 2026/27 | £800 | £800 |
| 2027/28 | £1,000 | £1,000 |
| 2028/29 | £1,400 | £3,600 |
| 2029/30 | £1,800 | £3,800 |
Identical for two years, then the gap opens sharply. Over a four-year term starting now, that is roughly £5,000 of BIK on the electric car against £9,200 on the plug-in hybrid, on the same list price and the same tax rate.
This is not an argument that a PHEV is the wrong choice. If your drivers cover long distances with limited charging access, a plug-in hybrid may still suit the business better. It is an argument for knowing the number before you commit, rather than discovering it in year three.
One easement worth knowing about
Separately, Finance Act 2026 introduced an easement for certain plug-in hybrids whose official CO2 figure rose under newer emissions testing. Where it applies, the car is treated as emitting 1 g/km and is banded on electric range as before. It is narrow: the car must have been first registered on or after 1 January 2025, have a CO2 figure of 51 g/km or more, and have been registered under particular emissions standards. If you think a vehicle in your fleet might qualify, it is worth checking with your accountant rather than assuming either way.
What to do about it
- Match the term to the rates, not just the vehicle. A three-year agreement starting now ends before the worst of the change. A four or five-year agreement does not.
- Run the BIK across the whole term, not year one. Year-one figures flatter plug-in hybrids considerably at the moment.
- Check the diesel position too. Diesels that do not meet the RDE2 standard carry a 4 percentage point supplement, capped at the maximum for the year.
- Revisit fleet policy before 2028, not during it. If your choice list was written around electric range, the logic behind it expires in April 2028.
Intelligent Vehicle Finance works through this with company directors and small fleets every week, and the answer differs by business. If you want the numbers run against a specific vehicle and term, call the team on 01752 429950 or request a callback.
You can also read our fuller guide to company car tax and BIK rates, or browse electric car leasing, business car leasing and business contract hire.
Rates from Finance Act 2023 section 11, Finance Act 2025 sections 5 and 6, and Finance Act 2026 section 19. Worked examples are illustrative and assume a 40 per cent income tax rate and no employee contribution. Tax treatment depends on individual circumstances and may change. This is general information, not tax advice.
Intelligent Vehicle Finance is a credit broker, not a lender, and receives a commission from the lender or funder when an agreement completes. A trading style of XLCR Vehicle Management Ltd, authorised and regulated by the Financial Conduct Authority (FRN 315268). Subject to status and availability.
Reviewed by Stacey Smith, Brand Director, Intelligent Vehicle Finance. Last updated: September 2026.