UK Company Car BIK Tax: Electric vs Hybrid Comparison Guide 2026

Comprehensive 2026/27 fleet guide comparing pure electric and plug-in hybrid company cars: BIK percentages, PHEV electric-range bands, P11D valuation, employee tax costs, employer Class 1A National Insurance and diesel surcharge rules.

1. EV vs PHEV BIK Tax Rate Comparison Matrix

When choosing a company car, evaluating **Benefit-in-Kind (BIK)** tax differences between pure electric vehicles (BEVs) and plug-in hybrids (PHEVs) is essential for tax optimization.

Vehicle Type & CO2 / Range	CO2 / Electric Range Specification	Statutory 2026/2027 BIK Rate
Pure Electric (BEV)	0g/km CO2	4% BIK Rate
Plug-in Hybrid (PHEV)	1–50g/km; 130+ electric miles	4% BIK Rate
Plug-in Hybrid (PHEV)	1–50g/km; 70–129 electric miles	7% BIK Rate
Plug-in Hybrid (PHEV)	1–50g/km; 40–69 electric miles	10% BIK Rate
Plug-in Hybrid (PHEV)	1–50g/km; 30–39 electric miles	14% BIK Rate
Plug-in Hybrid (PHEV)	1–50g/km; less than 30 electric miles	16% BIK Rate

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2. How Company-Car BIK Is Calculated in 2026/27

The taxable company-car benefit is broadly calculated using the car's tax value and the applicable BIK percentage. For example, a £40,000 zero-emission car at 4% produces a taxable benefit of £1,600. A 20% taxpayer would therefore have £320 of Income Tax on the full-year benefit; a 40% taxpayer would have £640 and a 45% taxpayer £720, before any applicable adjustments. The percentage is not chosen simply because a car is marketed as a 'hybrid'. The official CO2 figure and, for 1–50g/km cars, the electric range determine the appropriate percentage. The tax value can also be affected by accessories, employee capital contributions and availability periods.

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3. Employer NI & Diesel Treatment

Employers pay Class 1A National Insurance on taxable company-car benefits. The 2026/27 Class 1A rate is 15%. Certain diesel cars that do not meet the RDE2 emissions standard attract an additional 4 percentage points on the appropriate percentage. The increased percentage is subject to the statutory maximum of 37%. Cars meeting the relevant RDE2 standard do not receive this additional surcharge.

Key Takeaways

Pure electric cars pay 3% BIK in 2025/26.
Hybrid BIK rates depend heavily on pure electric battery range (miles).
PHEVs with under 30 miles electric range pay 14% BIK.
PHEVs with over 130 miles electric range pay a low 2% BIK.
Pure EVs remain significantly cheaper in annual BIK tax than petrol/hybrid models.

Related UK Driving & Transport Guides

UK EV Company Car Tax & Benefit-in-Kind (BIK) Calculator →UK Company Van & Fuel Benefit Charge BIK Guide →

Frequently Asked Questions (6 Verified Answers)

For 2026/27, cars emitting 1–50g/km have BIK rates of 4%, 7%, 10%, 14% or 16% depending on their official electric range. The lowest range-based percentage is 4% for 130+ electric miles, while less than 30 miles is 16%.

Non-plug-in hybrids are generally taxed using the same CO2-based appropriate-percentage framework as other cars. In 2026/27, rates range from 4% at 0g/km and then rise by CO2 band, reaching 37% at 155g/km and above.

Yes. Employers pay Class 1A National Insurance on taxable company-car benefits. The Class 1A rate for 2026/27 is 15%.

Electricity is not classified as fuel by HMRC, so free workplace charging is not a taxable fuel benefit.

Diesel cars that do not meet RDE2 emissions standards incur an additional 4% BIK surcharge (capped at 37% max).