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Electric Company Car Tax Calculator

A £38,000 electric car produces a taxable benefit of £1,520 this year. A £34,000 petrol car at 128g/km produces £10,540. That gap — nearly eight to one — is the last large tax break available to an owner-managed company, and it is narrowing on a published timetable.

Company car tax is the P11D price multiplied by an appropriate percentage set by CO2 emissions, taxed at the driver’s marginal rate. For a zero-emission car that percentage is 4% in 2026/27, up from 3%, and it rises to 5%, 7% and 9% across the three years to 2029/30. For a petrol car in the middle of the range it is already over 30%. Even at 9%, an EV sits well below the 17% at which the petrol and diesel bands begin.

Salary sacrifice sharpens it further. Salary given up is never paid, so the driver avoids income tax and National Insurance on it and the employer avoids 15% employer NI too — and the employer’s saving on the sacrifice usually exceeds the Class 1A National Insurance due on the car, which makes the scheme cash-positive for the business before the lease is even priced. The calculator below shows the four-year picture for both sides, against whatever the car is replacing.

2026/27 tax year

Rates checked 17 August 2026

The electric car

List price with delivery and VAT, less any first registration fee and road tax.

Sets the marginal tax rate. Salaries between £100,000 and £125,140 lose personal allowance, so relief there is 60%.

The gross amount given up each month. Set to 0 for a straight company car.

The car it replaces

From the V5C or the manufacturer’s spec. Rounded down to the nearest 5g/km.

Plug-in hybrids only, and only until 2028/29 when range stops counting.

Most diesels registered from 2021 do. If not, add four points to the percentage.

How this is worked out

Company car tax is the P11D price times an appropriate percentage set by CO2 emissions, taxed at the driver’s marginal income tax rate. Benefits in kind carry no employee National Insurance, but the employer pays Class 1A at 15% of the same benefit value.

For a zero-emission car the percentage is 4% in 2026/27, rising to 5%, 7% and 9% across the three years after that. A petrol car around 130g/km sits at 32%. That eight-fold gap, not the fuel saving, is what makes an EV cheap through a company.

Salary sacrifice works because the amount given up is never paid as salary: the driver saves income tax and National Insurance at their marginal rate on it, and the employer saves 15% employer NI on it too. What the driver pays instead is benefit-in-kind tax on the car, which on an EV is small. The calculator shows the net monthly figure after all of it.

Rates for 2026/27 are published. The three years after are derived from announced policy — zero-emission percentages are set to 2029/30, everything from 51g/km up rises a point a year with the cap moving to 38% then 39%, and plug-in hybrids stop being assessed on electric range from 2028/29. Treat the later years as the current plan, not a guarantee.

The figures it uses

  • Zero-emission appropriate percentage: 4% (2026/27), 5%, 7%, 9% to 2029/30
  • Petrol and hybrid bands for 2026/27: 17% at 51–54g/km rising to 37% at 155g/km and above
  • Non-RDE2 diesel supplement: 4 percentage points, within the year’s cap
  • Employer Class 1A on benefits: 15%
  • Income tax: 20%, 40% and 45%, with an effective 60% between £100,000 and £125,140
  • Employee National Insurance: 8% to £50,270, then 2%

All figures checked against HMRC, gov.uk and Bank of England sources on 17 August 2026. This is general information, not tax advice — for anything with real money on it, put it past your accountant.

Questions

What is the benefit-in-kind rate on an electric car in 2026/27?

4% of the P11D price, up from 3% in 2025/26. It rises to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30. On a £38,000 EV that is a taxable benefit of £1,520 in 2026/27, costing a basic-rate driver about £304 a year.

Is an electric company car still worth it in 2026?

For most drivers, yes, and the gap is still wide. A £38,000 EV at 4% produces a taxable benefit of £1,520; a £34,000 petrol car at 128g/km sits at 31% and produces £10,540. Even after the increases already announced, an EV at 9% in 2029/30 is well below the 17% where petrol and diesel bands start.

How does EV salary sacrifice save money?

The sacrificed salary never reaches the payslip, so the driver avoids income tax at 20%, 40% or 45% and employee National Insurance at 8% or 2% on it, and the employer avoids 15% employer NI on it. In exchange the driver pays benefit-in-kind tax on the car, which at 4% on an EV is small. The net cost is typically far below a personal lease on the same car.

Does the 2029 salary sacrifice cap affect electric cars?

No. The £2,000 cap announced at Autumn Budget 2025, taking effect from April 2029, applies to pension contributions made by salary sacrifice. Car schemes are not within it.

What does an electric company car cost the employer?

Class 1A National Insurance at 15% of the benefit value, so £228 a year on a £38,000 EV in 2026/27. Where the car is provided by salary sacrifice, set against that is the 15% employer NI saved on the sacrificed salary, which on £480 a month is £864 a year — so the scheme is usually cash-positive for the employer before the lease is even considered.

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