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.
Compare company-car tax over the actual agreement
Use the correct electric-range unit when checking a plug-in hybrid: HMRC's company-car bands use miles, not kilometres. Confirm the derivative's official CO2 figure and electric range, then calculate the tax for each tax year covered by the agreement, using the driver's circumstances and the actual start and end dates.
Charging access and journey patterns still matter when choosing between a fully electric car and a plug-in hybrid. Compare the tax alongside those practical needs.
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
- Check the actual start and end dates. Identify every tax year the agreement covers before comparing the company-car tax.
- 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 work out the tax on a specific car with our company car tax calculator, 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.