Leasing industry wants EV company car tax capped at 9% after 2030

The leasing industry wants the government to promise that electric company car tax will stay low after 2030. The British Vehicle Rental and Leasing Association (BVRLA) has called for the benefit-in-kind (BIK) rate on electric company cars to be held at 9% beyond the end of the decade, DM News reported on 19 October 2026, ahead of the Budget on 28 October. Rates are already set to more than double between now and 2029-30, and nothing has been decided for the years after.

That matters to anyone with an electric company car or a salary sacrifice EV, and to the wider market. BVRLA data shows company car and salary sacrifice drivers are far more likely to choose an EV than people leasing privately, and the BVRLA says low company car tax is the reason. Many of the EVs that reach the used market three or four years later start life on these schemes. Our guide to how company car tax works for EVs explains the basics.

What are the current company car tax rates for EVs?

Benefit-in-kind tax on a company car is a percentage of its list price (the P11D value), taxed at your income tax rate. For zero-emission cars, rates were set in the 2024 Budget and rise each year to 2029-30, according to Fleet News:

Tax year	EV BIK rate	Approximate monthly cost, basic-rate taxpayer (Fleet News example)
2026-27	4%	About £28
2027-28	5%	Rising
2028-29	7%	About £50
2029-30	9%	About £63
2030-31 onwards	Not yet set	Unknown

The monthly figures are Fleet News’s worked example for a typical EV; your own figure depends on the car’s list price. Higher-rate taxpayers pay double.

“Drivers could see their monthly liability more than double in the duration of a typical four-year lease, so it’s imperative they are aware of the changes before they commit to a new car,” said Fleet News content editor Matt de Prez.

What does the BVRLA want?

The BVRLA wants the 9% rate for electric cars to continue beyond 2030 rather than rise again. Its case rests on two points: certainty and evidence that BIK works.

Company cars and salary sacrifice cars are usually leased for three or four years. A driver choosing a car in 2027 will still have it in 2030 or 2031, so they need to know what tax they will pay in those years. Without rates set beyond 2029-30, leasing firms and employers cannot quote the full cost of a car with confidence.

The Budget is the natural place to set future rates, because BIK rates are normally announced several years in advance.

Why does company car tax matter so much for EVs?

Because it is one of the biggest reasons businesses and employees choose electric. The BVRLA’s Leasing Outlook report, covered by Fleet News, shows a huge gap in EV uptake depending on whether there is a tax advantage:

Type of lease	Share of fleet that is fully electric
Salary sacrifice	83%
Business contract hire	47%
Personal contract hire	18%

Salary sacrifice drivers are four times more likely to choose a fully electric car than personal contract hire customers. Without the BIK advantage, almost two-thirds (64%) of personal lease drivers are still in a petrol or diesel car.

The BVRLA says the figures “highlight the success of the supportive benefit-in-kind tax treatment of electric cars for driving uptake”. Its chief executive, Toby Poston, said the sector “needs to work in partnership with the Government”, pointing to “the faltering used EV market and the badly designed and poorly timed eVED regime proposals” as areas needing “an urgent policy rethink”.

Salary sacrifice is the fastest-growing part of leasing. Our EV salary sacrifice savings calculator shows how much it can save compared with buying or leasing privately.

What about plug-in hybrids?

Plug-in hybrids face much steeper rises. Under the 2024 Budget changes, zero-emission mileage will stop being used to set PHEV rates from 2028-29, and PHEVs move to a flat 19% rate by the end of the decade. Fleet News reported increases of up to 13 percentage points for some PHEV drivers.

There is a second squeeze too. Stricter Euro 6e-bis emissions testing has raised the official CO2 figures of many plug-in hybrids to better reflect real-world use. Once a PHEV’s CO2 rises above 50g/km, it falls out of the lowest BIK bands altogether. Our report on plug-in hybrid BIK rising to 18% and beyond explains the change.

The result is that the gap between EV and PHEV company car tax will widen sharply, making fully electric cars the obvious choice for most company car drivers.

What else is the leasing industry asking for?

Alongside a 9% rate after 2030, the BVRLA wants used EVs taxed on what they are actually worth. At the moment, a three-year-old electric company car is taxed on its original list price, even though it may be worth a fraction of that. The BVRLA wants BIK calculated on 35% of the original P11D value for EVs aged three years or more. HMRC is reported to be open to discussing a change, which we cover in our report on used EV company car tax.

The leasing sector is also worried about the pay-per-mile eVED tax from April 2028, which adds 3p a mile to EV running costs. Our explainer on how eVED will be enforced covers the details.

What happens if rates rise again after 2030?

If rates keep rising after 2030, salary sacrifice and company car EVs would become less attractive, and some employees might drop out of schemes. That would also affect the used market, because company and lease cars are the main source of nearly new used EVs.

There is a counter-argument. EVs are becoming cheaper to buy, and by the 2030s the government will want to raise more tax from them as fuel duty falls. Holding BIK at 9% indefinitely would cost the Treasury money it might need. The likely compromise is a published path, even if it rises slowly, so drivers can plan.

What should company car drivers do now?

If you are choosing a company car or salary sacrifice car now:

• Check the rate for every year of your lease. A four-year lease starting in 2026 will cover the 4%, 5%, 7% and 9% years.
• Compare EV and PHEV costs over the whole lease. The PHEV gap widens sharply from 2028-29.
• Watch the Budget on 28 October. It is the most likely moment for rates beyond 2030 to be set. Our Autumn Budget 2026 preview covers what to look out for.

How is company car tax calculated?

Benefit-in-kind tax on a company car is worked out in three steps:

1. Take the list price, or P11D value, including options but excluding first registration fee and road tax.
2. Multiply by the BIK rate for that car and tax year. For EVs, that is 4% in 2026-27.
3. Multiply by your income tax rate, usually 20% or 40%.

For example, a £40,000 EV at 4% gives a taxable benefit of £1,600 a year. A basic-rate taxpayer pays 20% of that, £320 a year, or about £27 a month. A higher-rate taxpayer pays £640 a year. At 9%, the same car’s taxable benefit rises to £3,600, costing a basic-rate taxpayer £720 a year.

That rise is significant, but it is still far below what a petrol or diesel car would cost. High-emission cars pay up to 37%.

Why did EV tax start so low?

When the government set electric company car tax at 0% in 2020-21, it was a deliberate incentive to shift fleets to EVs. Rates have risen gradually since, to 2% in 2023-24 and 2024-25, and then on the published path to 9% by 2029-30. The government has signalled that EVs will pay more over time as they become mainstream and fuel duty revenue falls.

The leasing industry accepts that rates will rise, but wants them to rise predictably. A known path lets fleets plan, leasing firms price contracts and employees choose cars with confidence.

Who are the BVRLA?

The British Vehicle Rental and Leasing Association represents companies that lease and rent cars, vans and trucks in the UK. Its members fund close to two million vehicles, about half of all leases now electric, which gives it a strong voice on company car tax and EV policy.

Our view

Company car tax has been the quiet engine of the UK’s EV transition. Low BIK rates have filled salary sacrifice and fleet schemes with electric cars, which then flow into the used market. The rise to 9% by 2029-30 is already priced in. What drivers and employers need now is certainty about what comes next, and a 9% rate after 2030 would give them that.