Electric company car tax set at 10% for 2030/31 in Budget 2026
Budget 2026 adds one percentage point to every company car tax band from April 2030. The leasing industry had asked for 9% to be held, and used EVs are still taxed on their original list price. Here is what it means for a company car or salary sacrifice driver.
Quick answers
- Budget 2026, delivered on 28 October, raises the company car tax rate for zero-emission cars from 9% in 2029/30 to 10% in 2030/31, according to an HMRC policy paper published the same day.
- Every other band also rises by one percentage point from 6 April 2030, so cars emitting 1 to 50g/km move from 19% to 20% and the maximum rate rises from 39% to 40%.
- On a £40,000 electric car, the 10% rate means £800 a year in tax for a basic-rate taxpayer and £1,600 for a higher-rate taxpayer, at today's income tax rates, against £720 and £1,440 at 9%.
- The leasing body BVRLA had asked for 9% to be held for 2030/31 and 2031/32; its chief executive called the outcome positive, even if it is just one more year of clarity.
- No rate has been set for 2031/32, and used electric company cars are still taxed on their original list price.
- HMRC estimates the change will raise £310m in 2030/31 and £345m in 2031/32, and says about 920,000 employees drive a company car.
Company car tax on electric cars will be 10% of the list price in the 2030/31 tax year, up from 9% in 2029/30. The rate was set in Budget 2026 on 28 October, and an HMRC policy paper published the same day confirms that every band rises by one percentage point from 6 April 2030, with the top rate rising to 40%.
For a company car or salary sacrifice driver, the change is small. On a £40,000 electric car, it adds £80 a year for a basic-rate taxpayer and £160 for a higher-rate taxpayer, at today’s income tax rates. The leasing industry had asked for 9% to be held, so this is a modest rise, not a freeze. What drivers gain is a known rate for the final year of a four-year lease starting in April 2027.
What has the Budget announced for company car tax?
The government has set the benefit-in-kind (BiK) rates, known in law as the “appropriate percentages”, for 2030/31. According to HMRC, the percentage for zero-emission cars and for every other emission band goes up by one point, and the maximum goes up to 40%. The change takes effect from 6 April 2030 and will be legislated in Finance Bill 2026-27.
HMRC says the aims are to give certainty on rates up to 2031, keep the incentive for zero-emission and electric cars, and support the public finances. It estimates the measure will raise £310m in 2030/31 and £345m in 2031/32, figures certified by the Office for Budget Responsibility. It says about 920,000 employees drive a company car, provided by at least 160,000 businesses.
EV Fleet World reports the same figures: zero-emission cars rise from 9% to 10%, cars emitting 1 to 50g/km from 19% to 20%, and all other bands by one point up to the 40% cap.
What are the electric company car tax rates to 2030/31?
The path for electric cars was already set up to 2029/30. HMRC’s 2024 policy paper set rises of two points a year in 2028/29 and 2029/30, reaching 9%. The new rate adds one more year.
| Tax year | Zero-emission cars | Cars emitting 1 to 50g/km | Maximum rate |
|---|---|---|---|
| 2026/27 | 4% | Varies with electric range | Set in 2022 |
| 2027/28 | 5% | Varies with electric range | Set in 2022 |
| 2028/29 | 7% | 18% | 38% |
| 2029/30 | 9% | 19% | 39% |
| 2030/31 (new) | 10% | 20% | 40% |
| 2031/32 | Not set | Not set | Not set |
Deloitte notes that a one-point rise is slower than the earlier two-point annual rises (in 2028/29 and 2029/30), which keeps the incentive to choose an electric company car. Our guide to the benefit in kind rate for electric cars explains how the bands work.
How much will a £40,000 electric company car cost in tax?
Company car tax is worked out in three steps: take the list price (the P11D value), multiply by the BiK rate, then multiply by your income tax rate. Our worked example uses these inputs:
- List price: £40,000, a typical figure for a mid-size electric car.
- BiK rates: 9% in 2029/30 and 10% in 2030/31, as set by HMRC.
- Income tax rates: 20% basic, 40% higher and 45% additional, the 2026/27 rates on GOV.UK. Rates and bands could change before 2030, and Scotland has different bands.
| 2029/30 at 9% | 2030/31 at 10% | Difference a year | |
|---|---|---|---|
| Taxable benefit | £3,600 | £4,000 | £400 |
| Basic-rate taxpayer (20%) | £720 a year (£60 a month) | £800 a year (about £67 a month) | £80 |
| Higher-rate taxpayer (40%) | £1,440 a year (£120 a month) | £1,600 a year (about £133 a month) | £160 |
| Additional-rate taxpayer (45%) | £1,620 a year | £1,800 a year | £180 |
These are our estimates from the stated inputs, not quotes. To run the sums for your own car, use our company car tax (BiK) calculator for electric cars.
What does it mean for a lease signed now?
Most company cars and salary sacrifice cars are on three or four year contracts, so the rate in the final year matters. A four-year lease starting in April 2027 would run through 2027/28, 2028/29, 2029/30 and 2030/31. Until this Budget, the last of those years had no published rate.
On the same £40,000 car, our sums for that four-year lease are:
| Tax year | Rate | Basic-rate tax | Higher-rate tax |
|---|---|---|---|
| 2027/28 | 5% | £400 | £800 |
| 2028/29 | 7% | £560 | £1,120 |
| 2029/30 | 9% | £720 | £1,440 |
| 2030/31 | 10% | £800 | £1,600 |
| Four-year total | £2,480 | £4,960 |
Had 9% been held, the four-year totals would be £2,400 and £4,800. The tax roughly doubles over the lease, but most of that rise was already set before this Budget. The new rate adds £80 or £160.
For comparison, a plug-in hybrid with the same list price and CO2 of 1 to 50g/km would be taxed at 20% in 2030/31: a taxable benefit of £8,000, or £1,600 a year for a basic-rate taxpayer and £3,200 for a higher-rate taxpayer. Our report on plug-in hybrid company car tax rising to 18% explains why many hybrids will sit even higher.
Does the rate apply to salary sacrifice cars?
Yes. A car provided through salary sacrifice is taxed as a company car. HMRC guidance says that for cars with CO2 emissions of no more than 75g/km, the normal company car charge always applies under salary sacrifice, rather than the higher of that charge and the salary given up. So an electric car on a salary sacrifice scheme pays 10% of its list price in 2030/31, like any other electric company car.
EV Fleet World, reporting comments from The Electric Car Scheme, says the government has also extended EV salary sacrifice incentives for another year. We have not been able to confirm what that refers to in the Budget documents, so we have not treated it as a separate change here. Our EV salary sacrifice savings calculator shows how the BiK rate feeds into the overall saving.
What did the leasing industry want?
The British Vehicle Rental and Leasing Association (BVRLA) had asked for the 9% electric rate to be held for both 2030/31 and 2031/32, as we reported in our BVRLA report. Alphabet GB had made the same request, according to EV Fleet World.
Reaction reported by EV Fleet World was mixed:
- BVRLA chief executive Toby Poston said greater certainty over future rates “is a positive outcome, even if it is just one more year of clarity.”
- Thom Groot, chief executive of The Electric Car Scheme, said the rise “starts to price out those looking at second-hand EVs and those on lower incomes”.
- Caroline Sandall-Mansergh of Alphabet GB said “it’s unwelcome and risks creating yet another barrier for drivers”.
- Zenith chief executive Richard Jones welcomed the longer-term clarity and the continued low rates for fully electric cars.
Are used electric company cars still taxed on their list price?
Yes. “Drivers are still taxed on a vehicle’s original list price,” Dave Bushnell of Fleet Operations told EV Fleet World. A three-year-old electric car offered through a used salary sacrifice scheme is taxed on what it cost new, not on what it is worth now.
The leasing industry has pushed for change. Groot wanted rates for second-hand EVs cut by two-thirds, and the BVRLA has asked for used EVs to be taxed on 35% of their original P11D value. Neither was in the Budget. Our report on HMRC and company car tax on used EVs covers the discussions so far.
What has not been decided?
Three things are still open:
- 2031/32 and later. HMRC’s paper sets a rate for 2030/31 only. Any four-year lease starting after 5 April 2027 will again have a final year with no published rate.
- Used EVs. There is no change to the list price basis.
- Pay-per-mile tax. The Electric Vehicle Excise Duty of 3p a mile is a separate cost from April 2028, which applies to company and private drivers alike. Our explainer on eVED and how it will be enforced covers the detail.
What should company car drivers do now?
- Check the rate for every year of your contract. A lease that runs into 2030/31 now has a known final year at 10%.
- Use the list price, not the monthly rental. Company car tax is based on the P11D value, so a cheaper car to buy means less tax, whatever the lease cost.
- Compare electric and hybrid over the whole lease. At 10% against 20% or more, the gap stays wide.
- Allow for change. Our examples use today’s income tax rates. If bands or rates move by 2030, so will your bill.
Our view
A one-point rise is a long way from the cliff edge some fleets feared, and it gives drivers whose four-year lease starts by April 2027 a full set of rates. On a £40,000 electric car it costs an extra £80 to £160 a year, which will not change many decisions. The bigger gaps remain: nothing is set beyond April 2031, and used electric cars are still taxed as if they were new. For anyone choosing a company car or salary sacrifice car now, electric remains far cheaper to tax than any alternative.
How we test and where our numbers come from
Range figures are official WLTP combined values taken from manufacturer UK specification pages, with real-world estimates drawn from independent comparative testing. Prices are UK list prices at the time of the latest update. Tax, grant and charging-scheme figures come from GOV.UK and HMRC publications. We re-check every guide when pricing, specification or policy changes. Last checked 13 November 2026. How we work out our own figures.
Frequently asked questions
What is the company car tax rate for electric cars in 2030/31?
It is 10% of the car's list price, confirmed in Budget 2026 on 28 October. That is one percentage point higher than the 9% that applies in 2029/30. The change takes effect from 6 April 2030 and will be legislated in Finance Bill 2026-27.
How much company car tax will I pay on a £40,000 EV in 2030/31?
At 10%, the taxable benefit is £4,000 a year. At today's income tax rates, a basic-rate taxpayer pays 20% of that, £800 a year, and a higher-rate taxpayer pays 40%, £1,600. Tax bands could change before 2030, and Scottish rates are different.
Did the government agree to hold electric company car tax at 9%?
No. The BVRLA, which represents leasing companies, asked for 9% to be held for 2030/31 and 2031/32. The Budget set 10% for 2030/31 and did not set a rate for 2031/32.
Does the 10% rate apply to salary sacrifice electric cars?
Yes. A salary sacrifice car is taxed as a company car. HMRC guidance says cars with CO2 emissions of no more than 75g/km always use the normal company car tax charge, so an electric car on salary sacrifice pays the same percentage of its list price as any other electric company car.
Are used electric company cars taxed on their current value?
No. Company car tax is still based on the car's original list price, even for a used car worth much less. The leasing industry has asked for a lower basis for used EVs, but the Budget roadmap does not address it.
Sources and further reading
- gov.ukHMRCPrimary source referenced in this article.
- gov.ukTaxation of company cars: the appropriate percentage for tax years 2028 to 2029 and 2029 to 2030HMRC policy paper of 30 October 2024: zero-emission rate rising by two points a year to 9% in 2029/30, the 19% rate for 1 to 50g/km and the 39% maximum in 2029/30.
- evfleetworld.co.ukAutumn Budget 2026: Government confirms BiK rates for 2030/31 as EV rates held lowRates by band for 2030/31 and reaction from the BVRLA, The Electric Car Scheme, Fleet Operations, Alphabet GB and Zenith.
- taxscape.deloitte.comCompany car tax (Budget 2026)Deloitte's summary: one point rise for all company cars in 2030/31, capped at 40%, slower than the earlier two-point rises for electric cars.
- gov.ukSalary sacrifice and the effects on PAYECars with CO2 emissions of no more than 75g/km always use the normal company car earnings charge under salary sacrifice.
- gov.ukIncome Tax rates and Personal Allowances2026/27 income tax rates of 20%, 40% and 45% used in our worked examples, and the note that Scottish bands differ.
EV Compared
The EV Compared editorial team tracks the UK electric vehicle market full time: new model launches, list prices, WLTP and real-world range, public charging tariffs and the tax rules that decide what an EV actually costs to run. Every guide is checked against manufacturer specifications and official GOV.UK figures, and updated whenever the numbers move.
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