For company car drivers, choosing the right vehicle can make a significant difference to monthly tax costs. In the 2026/27 tax year, fully electric company cars remain the most tax-efficient option, with zero-emission cars sitting in the 4% Benefit-in-Kind (BIK) band.
That means electric cars continue to offer a powerful advantage for drivers, fleet managers and employers looking to reduce tax, control whole-life costs and support the transition to lower-emission fleets.
Plug-in hybrids still have a role for some drivers, but the tax position is changing. From 2028/29, many PHEVs lose much of their company car tax advantage, which is why this year’s selection focuses on the best electric company cars to beat BIK in 2026/27 and beyond.
The models below are all fully electric, produce 0g/km CO2 and sit in the 4% BIK band for the 2026/27 tax year.
| Model | CO2 | BIK band 2026/27 | Tax per month | EV range | Best for |
|---|---|---|---|---|---|
| Renault 5 E-Tech Evolution 40 kWh urban range 120hp | 0g/km | 4% | From £15 | 192 miles | Lowest monthly tax |
| Kia EV3 58.3kWh Air | 0g/km | 4% | From £22 | 270 miles | Compact electric SUV value |
| Skoda Elroq 60 63kWh Edition Auto | 0g/km | 4% | From £23 | 265 miles | Family-friendly practicality |
| Mercedes-Benz CLA 250+ with EQ Technology Sport Edition Auto | 0g/km | 4% | From £30 | 484 miles | Long-range premium saloon driving |
| BMW iX3 50 xDrive | 0g/km | 4% | From £39 | 493 miles | Long-range executive SUV appeal |
| Audi A6 Avant e-tron Sport 210kW Auto | 0g/km | 4% | From £43 | 362 miles | Electric estate practicality |
Calculate your company car tax
The BIK rate for fully electric company cars is 4% in the 2026/27 tax year. This applies to zero-emission cars with CO2 emissions of 0g/km.
Electric company car BIK rates are confirmed as follows:
| Tax Year | Electric company car BIK rate |
|---|---|
| 2026/27 | 4% |
| 2027/28 | 5% |
| 2028/29 | 7% |
| 2029/30 | 9% |
This gives fleets and drivers useful certainty when planning replacement cycles, particularly where vehicles are leased over three or four years.
Company car tax is based on the taxable value of the car and the driver’s income tax rate.
The taxable value is calculated using the car’s P11D value and its Benefit-in-Kind percentage. That percentage is based mainly on CO2 emissions. For plug-in hybrids, the electric-only range also affects the BIK rate until the 2028/29 tax year.
The basic formula is:
P11D value x BIK percentage x income tax rate = annual company car tax
For example, a fully electric car with a P11D value of £40,000 in the 2026/27 tax year would have a taxable benefit of £1,600 because the BIK rate is 4%. A 20% taxpayer would pay £320 a year in company car tax, or around £27 a month. A 40% taxpayer would pay £640 a year, or around £53 a month.
That is why EVs remain so attractive for company car drivers. The table below shows the BIK percentage bands for electric cars and low-emission vehicles from 2026/27 to 2029/30.
| CO2 (g/km) | Electric only range | 2026/27 BIK | 2027/28 BIK | 2028/29 BIK | 2029/30 BIK |
|---|---|---|---|---|---|
| 0 | N/A | 4% | 5% | 7% | 9% |
| 1-50 | >130 | 4% | 5% | 18% | 19% |
| 1-50 | 70-129 | 7% | 8% | 18% | 19% |
| 1-50 | 40-69 | 10% | 11% | 18% | 19% |
| 1-50 | 30-39 | 14% | 15% | 18% | 19% |
| 1-50 | <30 | 16% | 17% | 18% | 19% |
| 51-54 | 17% | 18% | 19% | 20% |
Until now, plug-in hybrids have been a useful company car option for drivers who are not ready to move to a fully electric car. With low CO2 emissions and a useful electric-only range, many PHEVs have qualified for attractive BIK rates.
However, the tax position changes significantly from the 2028/29 tax year. From April 2028, many 1–50g/km plug-in hybrid company cars move to an 18% BIK rate, regardless of electric-only range. In 2029/30, that rises again to 19%.
For drivers taking a new company car now on a typical three or four-year replacement cycle, this could mean a PHEV becomes noticeably more expensive before the end of the lease.
Here is a typical comparison using two similarly priced cars.
The Benefit-in-Kind position of the Jaecoo 7 1.5T SHS Luxury Auto PHEV rises substantially over the next three years. For a company car driver who pays tax at 40%, the tax payable across the period would be around £5,460.
| Tax Year | BIK percentage | Taxable benefit | Tax payable at 40% |
|---|---|---|---|
| 2026/27 | 10% | £3,500 | £1,400 |
| 2027/28 | 11% | £3,849 | £1,540 |
| 2028/29 | 18% | £6,299 | £2,520 |
| Tax Year | BIK percentage | Taxable benefit | Tax payable at 40% |
|---|---|---|---|
| 2026/27 | 4% | £1,477 | £591 |
| 2027/28 | 5% | £1,847 | £739 |
| 2028/29 | 7% | £2,585 | £1,034 |
This is why the medium-term outlook for EV company car drivers remains highly tax advantageous from 2026/27 to 2029/30. It is also why drivers currently considering a PHEV should look carefully at the 2028/29 tax position before committing to a new replacement cycle.
PHEVs can still suit some drivers, especially where regular charging is available and daily journeys can be completed mostly on electric power.
However, the 2028/29 tax changes mean the BIK advantage is much less compelling over a typical lease period. For company car drivers who want the best chance of reducing tax exposure over the medium term, a fully electric car is now the stronger option.
Because of this, our 2026/27 list focuses on fully electric company cars.
Drivers currently in a PHEV, or considering one, should plan carefully. Where possible, fleets should review replacement cycles to avoid drivers being caught by the higher PHEV BIK rates from April 2028.
Company car tax is also an important consideration for employees who lease an electric car through a salary sacrifice scheme.
Under a salary sacrifice arrangement, an employee gives up part of their gross salary in exchange for a leased vehicle. Because the deduction is taken from gross salary, the employee can reduce income tax and Class 1 National Insurance Contributions on the amount sacrificed.
That can make electric car salary sacrifice highly attractive.
However, the vehicle is still treated as a benefit by HMRC, so the employee is liable for Benefit-in-Kind tax. This is why choosing a low-BIK electric car is so important. The lower the BIK rate and the more suitable the car’s P11D value, the more effective the salary sacrifice saving is likely to be.
For 2026/27, the 4% BIK rate on fully electric cars means EV salary sacrifice remains one of the most tax-efficient ways for employees to access a new car.
EV Salary Sacrifice Scheme – an overview of how electric car salary sacrifice works
Salary sacrifice for employers – guidance for businesses setting up or managing a scheme
Salary sacrifice for employees – how employees can save through an EV salary sacrifice car
The following electric cars combine low BIK, strong fleet appeal, useful electric range and practical everyday usability.
The tax quoted is calculated using the Fleet Alliance company car tax calculator and is based on a 20% taxpayer. Actual tax payable will depend on the car’s P11D value, chosen specification, optional equipment and the driver’s individual tax rate.
The Audi A6 Avant e-tron is a strong choice for company car drivers who want the practicality of an estate without moving into an SUV.
Built on Audi’s latest PPE electric platform, which is also used by the Q6 SUV, the A6 Avant e-tron is offered in several versions. The model selected here balances performance, practicality and tax efficiency, while the wider range includes versions with even longer official driving ranges.
The Avant body style gives the A6 e-tron a clear fleet advantage. It has the same premium look and feel as the Sportback, but its estate shape makes it easier to carry bulky items. Boot space is a practical 502 litres, making it a useful option for drivers who need more load-carrying ability than a conventional saloon or hatchback can offer.
Inside, the A6 e-tron has the high-quality finish expected from Audi, while the driving experience is refined and well-suited to longer business journeys. Strong charging capability and competitive efficiency add to its appeal as a premium electric company car.
The new BMW iX3 is one of the most important electric company cars arriving for the 2026/27 tax year.
It is the first production BMW built on the brand’s Neue Klasse EV platform, which introduces highly efficient electric motors, new battery technology and 800-volt charging capability. For company car drivers, the headline figure is range. The iX3 50 xDrive offers up to 493 miles, making it one of the longest-range electric SUVs available.
That range is backed by very rapid charging. When connected to a suitably powerful charger, the iX3 can add a significant amount of range in around 10 minutes, helping reduce downtime for drivers who regularly cover long distances.
The iX3 also brings a new design direction for BMW, inside and out. It combines executive SUV practicality with the kind of driving dynamics expected from the brand, making it an appealing choice for drivers who want to move into an EV without compromising on performance, cabin quality or long-distance ability.
The Kia EV3 is one of the most compelling compact electric SUVs for company car drivers.
The EV3 has quickly established itself as a strong fleet choice thanks to its efficient powertrain, distinctive design and practical cabin. The Standard Range model selected here offers a useful 270-mile range, while drivers who need more distance between charges can look at the Long Range version.
For many company car drivers, the EV3’s appeal lies in how much it offers for the money. It is compact enough for urban and suburban use but spacious enough to feel like a proper family car. The cabin is modern and easy to use, with good equipment levels and a quality finish.
The EV3 is also comfortable and composed on the road, which matters for drivers spending regular time behind the wheel. With a low monthly tax figure and the same 4% EV BIK band as much more expensive electric cars, it is one of the strongest low-BIK company car choices in this list.
The Mercedes-Benz CLA 250+ with EQ Technology is a premium electric company car with a standout official range.
Although the CLA name is familiar, this electric version is based on Mercedes-Benz’s Modular Architecture, which will also underpin future electric and hybrid Mercedes models. That gives the CLA a highly efficient electric platform and makes it one of the most interesting premium company car options in the 2026/27 tax year.
The CLA 250+ uses an 85kWh battery and a 268bhp electric motor driving the rear wheels. The official range is up to 484 miles, which is particularly useful for higher-mileage company car drivers.
It also benefits from 800-volt charging capability, with DC fast charging of up to 320kW. Where a suitable charger is available, this makes the CLA a practical long-distance EV as well as a low-BIK premium saloon.
Inside, the CLA feels modern, digital and upmarket, with the kind of cabin technology and comfort expected from Mercedes-Benz. For drivers who want low BIK without stepping away from a premium badge, it is a very strong choice.
The Renault 5 E-Tech is one of the most eye-catching affordable electric cars of the moment, and it also makes a strong case as a low-BIK company car.
Its design nods to the original Renault 5 but avoids feeling overly retro. Underneath, it is a modern electric car using Renault’s AmpR architecture. The underfloor battery helps create a low centre of gravity, while the multi-link rear axle gives the car a more composed and enjoyable drive than many small EVs.
The Evolution 40 kWh urban range 120hp model selected here is the lower-cost version, with an official range of 192 miles. That will be enough for many urban, suburban and lower-mileage business users, especially where regular home or workplace charging is available.
The bigger attraction is tax. With a monthly company car tax figure from £15 for a 20% taxpayer, the Renault 5 E-Tech is one of the most affordable ways to access a new electric company car in the 2026/27 tax year.
The Skoda Elroq is a practical electric SUV that fits neatly into the company car market.
It was the first Skoda model to use the brand’s new Tech-Deck Face design, giving it a more modern look while retaining the understated practicality that makes Skoda popular with fleet drivers.
Inside, the Elroq is spacious, well finished and easy to live with. The 470-litre boot gives it useful family and business practicality, while Skoda’s familiar “Simply Clever” touches add everyday convenience. The cable storage net beneath the parcel shelf is a small but thoughtful feature that many EV drivers will appreciate.
The 60 Edition model selected here offers 201bhp and a 265-mile range, making it a good balance between usability, price and tax efficiency. Drivers needing more range can also consider higher-battery versions of the Elroq.
For company car users who want a sensible, comfortable and practical EV SUV with low BIK, the Elroq is a very appealing option.
The following models are also worth monitoring. Some are new, newly announced or still awaiting final pricing and tax-per-month examples, but they could become strong low-BIK company car choices during the 2026/27 tax year.
The Volkswagen ID.3 Neo is a significant update of Volkswagen’s electric hatchback.
Often described as the electric successor to the Golf, the ID.3 has been heavily revised in Neo form. The exterior uses Volkswagen’s newer “Pure Positive” design language, giving it a cleaner and more confident appearance.
Inside, the changes are just as important. Volkswagen has moved away from some of the fiddlier touchscreen controls of earlier ID.3 models, with physical buttons returning to improve everyday usability.
The new powertrain line-up is expected to include 50kWh, 58kWh and 79kWh battery options, with the longest-range version offering up to around 390 miles. That could make the ID.3 Neo particularly attractive for company car drivers who want familiar Golf-sized practicality, low BIK and usable long-distance range.
The new BMW i3 is set to become one of the most important electric executive company cars.
Unlike the original compact i3, this new model is the electric successor to the BMW 3 Series saloon. That makes it especially relevant to company car drivers, as the 3 Series has long been one of the defining executive fleet cars.
The headline figure is range. The new i3 is expected to offer more than 500 miles in selected versions, making it one of the strongest long-distance EVs in its class.
First to market is expected to be the i3 50 xDrive, using dual motors and all-wheel drive. More versions are likely to follow, giving fleets a broader choice of price, range and performance.
The design remains recognisably BMW, with saloon proportions, a long wheelbase, short overhangs and a low, confident stance. For drivers waiting for a fully electric alternative to the traditional executive saloon, the new i3 should be high on the watch list.
The electric Mercedes-Benz C-Class is another major upcoming executive company car.
Like the BMW i3, it brings a familiar premium company car nameplate into the fully electric market. That matters because many drivers still want the comfort, refinement and image of a traditional executive saloon, but with the tax efficiency of an EV.
The electric C-Class is expected to offer a range of up to around 473 miles, making it suitable for long-distance business users. Rapid charging should also be a major strength, with the ability to add around 200 miles of range in approximately 10 minutes where suitable charging infrastructure is available.
Inside, the C-Class Electric is expected to feature Mercedes-Benz’s latest MBUX technology, including a wide Hyperscreen-style dashboard layout and software designed for over-the-air updates.
For drivers choosing between an electric BMW, Audi or Mercedes-Benz, the new C-Class Electric could become one of the most important premium company cars of 2026/27.
The Volvo EX60 could be one of the most important electric SUVs for fleet and company car drivers.
It is effectively an all-electric alternative to the XC60, which has long been one of Volvo’s most popular models. That gives the EX60 a strong starting point: familiar SUV appeal, premium comfort and a size that suits both business and family use.
The EX60 uses Volvo’s next-generation SPA3 electric architecture. It also introduces cell-to-body battery integration, where the battery forms part of the vehicle structure. This helps improve efficiency, packaging and strength.
Inside, the EX60 is expected to offer the minimalist, high-quality cabin design associated with Volvo, combined with a high level of technology and driver assistance.
With long-range versions expected to offer more than 500 miles, the EX60 could become a particularly attractive choice for company car drivers who want a premium electric SUV with low BIK and strong long-distance ability.
The best company car for tax is not always the cheapest car or the one with the longest range. Drivers and fleet managers should consider the full picture.
Key points include:
BIK percentage
Fully electric cars are the most tax-efficient company car choice in 2026/27 because they sit in the 4% BIK band.
P11D value
The car’s P11D value has a direct impact on taxable benefit. A lower-priced EV can often mean a lower monthly tax bill.
Electric range
Drivers covering high business mileage may benefit from a longer-range EV, even if the P11D value is higher.
Charging access
Home, workplace and public charging access should influence vehicle choice. A lower-range EV can work well for drivers with reliable charging, while high-mileage drivers may need faster charging and longer range.
Whole-life cost
Fleet managers should consider lease cost, maintenance, tyres, insurance, charging, downtime and tax together.
Driver suitability
The best EV is one that fits the driver’s real-world use. A city-based employee may not need a 500-mile range, while a field-based driver may find it essential.
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