Electric company cars – Do they still make sense with the upcoming changes? 

Electric vehicles have become an increasingly popular choice for people who have access to a company car.

Low tax charges, predictable running costs and environmental benefits have made EVs an appealing option, particularly for directors, employees and business owners who drive a company-provided vehicle.

Over the next few tax years, the rules around electric company cars are changing. There is nothing sudden or drastic, but there are adjustments worth understanding if you already drive an electric company car or are considering one.

EVs remain tax-efficient, but the savings are slowly reducing.

Why electric company cars have been so attractive

Company cars are taxed through Benefit in Kind, which determines how much personal tax you pay for the use of the vehicle.

Electric vehicles have benefited from very low BIK rates, which has meant:

• Lower personal tax bills compared with petrol or diesel cars
• Reduced employer National Insurance costs
• A more affordable way to drive a new or higher-specification vehicle

For many people, EVs have been one of the few company car options that genuinely make financial sense.

What is changing for electric company cars?

The main change is a gradual increase in BIK rates for electric vehicles over the coming years.

Incentives are not being removed overnight. Instead, the tax advantage is being scaled back gradually as electric vehicles become more common.

In practical terms:

• Electric cars will still be taxed more favourably than petrol or diesel models
• The amount of tax you pay will increase slightly year by year
• Planning ahead becomes more important

If you already have an electric company car, the impact is likely to be modest. You may notice:

• A small increase in your personal tax over time
• Slightly higher overall costs linked to the vehicle

Even with these changes, EVs are still expected to be the most tax-efficient company car option available.

Choosing a company car

If you are thinking about changing your company car or joining a scheme for the first time, it is worth looking beyond the headline tax figure for the first year.

Things to consider include:

• How BIK costs will change over the time you expect to keep the car
• Whether leasing or purchasing works better for your situation
• The impact of salary sacrifice, if it is offered
• Running costs such as charging, insurance and maintenance

Electric vehicles remain appealing, but the decision now benefits from a more rounded view.

New road-use charges for EVs from 2028

Looking a little further ahead, drivers of electric vehicles should be aware of new mileage-based charges planned from April 2028.

Current proposals suggest:

• Battery electric vehicles will be charged at around three pence per mile
• Plug-in hybrids at around one point five pence per mile
• These charges will apply alongside existing Vehicle Excise Duty

For someone driving around eight to nine thousand miles a year, this could add roughly £250 to annual motoring costs. While this is still likely to be cheaper than fuel duty on petrol or diesel cars, it is another cost to factor in.

Expensive Car Supplement changes may help

From April 2026, the threshold for the Expensive Car Supplement for electric vehicles will increase from £40,000 to £50,000.

This means many mid-range and higher-spec electric vehicles will avoid the surcharge, making them a more realistic option if you are considering a better-equipped model.

What should you do now?

These changes are about gradual adjustment rather than removing incentives entirely. Electric vehicles continue to offer meaningful tax advantages for many people.

It may be a good time to:

• Review the tax cost of your current company car
• Look at how future BIK increases will affect you
• Revisit your options before committing to a new vehicle
• Seek advice to ensure the numbers still stack up for your circumstances

With the right planning, electric company cars can remain a cost-effective and practical choice. Speak to our team for advice on choosing the most tax-efficient vehicle.