Company car tax rates have increased across most vehicle categories from 6 April 2026, affecting more than 700,000 employees.
Electric vehicles (EVs) now attract a 4% benefit-in-kind (BIK) rate, up from 3%. While still relatively low, this marks a continued shift upwards. Low-emission cars emitting 1–50g/km of CO₂ are taxed at 4-20%, while higher-emission vehicles face rates of 21-37%.
The BIK charge is calculated using the car’s P11D value, which is its full list price when first registered, including VAT and any optional extras. The price the employer pays is irrelevant. The resulting taxable benefit is then applied to the employee’s income tax band.
For 2026/27, most cars emitting under 75g/km see a 1% increase in their BIK rate. Fully electric cars remain capped at 5%, and low-emission vehicles below 75g/km are capped at 21%. Rates for cars emitting 75g/km or more are frozen for this tax year.
The highest BIK rate of 37% applies to petrol cars emitting 155g/km or more and to diesel cars emitting 135g/km or more. This top rate will remain frozen until 5 April 2028.
Fuel and van benefit charges have also risen in line with CPI. The van benefit charge increases to £4,170, while the van fuel benefit rises to £798. The car fuel benefit multiplier increases to £29,200.
Zero-emission vans continue to benefit from a nil BIK rate, maintaining the Government’s environmental incentives.
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