Electric company car · BIK · 2026/27
Electric company car tax 2026/27: 4% BIK and Tesla examples
Company car tax on a fully electric car is charged as Benefit in Kind (BIK) when the car is available for private use. In 2026/27 a zero-emission company car such as a Tesla uses a 4% BIK rate; the actual tax depends on the car's statutory value and your income-tax position.
BIK on electric cars and mileage reimbursement are two different calculations. Company car tax applies to the private availability of the vehicle. Business mileage in the same electric company car can separately use HMRC's Advisory Electric Rates for electricity reimbursement.
1. What is the electric car company tax rate in 2026/27?
For tax year 2026/27, a zero-emission company car has a 4% appropriate percentage. That is the BIK rate for fully electric company cars, including Tesla models, when calculating the full-year company-car benefit under the normal statutory rules.
| Tax year | Zero-emission company car BIK rate |
|---|---|
| 2026/27 | 4% |
| 2027/28 | 5% |
| 2028/29 | 7% |
| 2029/30 | 9% |
The published rate path matters when comparing a multi-year lease or salary-sacrifice agreement. A car that looks very cheap to tax in 2026/27 will have a higher taxable percentage later in the agreement.
2. How electric car company tax is calculated
In broad terms, HMRC starts with the car's statutory price — commonly discussed as the P11D value — and applies the appropriate percentage. The resulting cash-equivalent benefit is then taxed as employment income.
Example · £50,000 Tesla
£2,000 taxable car benefit in 2026/27
£50,000 × 4% = £2,000. At a 20% marginal income-tax rate that is about £400 of income tax for the year; at 40% it is about £800.
20% taxpayer
£400/year
About £33.33 per month before any other adjustments.
40% taxpayer
£800/year
About £66.67 per month before any other adjustments.
This is deliberately a simple example. Availability adjustments, qualifying employee capital contributions, payments required for private use and individual tax circumstances can change the final figure.
3. What does P11D value mean for an electric company car?
The company-car calculation does not normally use the amount your employer pays each month, the lease rental or the current second-hand value. HMRC's P11D guidance starts from the UK list price around first registration, including items such as VAT, delivery and qualifying accessories.
An employee capital contribution towards the car or accessories can reduce the price used in the calculation, subject to a maximum statutory deduction of £5,000. If you are unsure of the correct value, use the figure supplied by the employer, leasing company or fleet provider rather than guessing from today's configurator price.
4. Salary sacrifice and electric company cars
Salary sacrifice is an optional remuneration arrangement: the employee gives up some cash salary in return for a benefit. For many benefits, HMRC can compare the normal taxable value with the salary foregone.
Cars with CO₂ emissions of 75g/km or less are an important exception. HMRC says the optional-remuneration comparison does not apply to these cars. A fully electric Tesla therefore continues to be taxed using the normal company-car cash-equivalent rules rather than automatically using the higher amount of salary sacrificed.
5. Company car BIK is not a mileage tax
The company-car benefit is fundamentally about a car being available for private use. Driving fewer private miles does not normally reduce the percentage. A genuine business-only car can be exempt in limited circumstances, but private use must be prohibited and must not actually occur.
This is why trip records still matter, but for a different reason. A mileage log can support evidence of actual use and business journeys; it does not turn BIK into a per-mile calculation.
6. Business mileage in an electric company car uses different rates
Do not use the employee-owned-car 55p/25p AMAP rates for a company Tesla. From 1 June 2026 HMRC's Advisory Electric Rates are 7p per business mile for home charging and 15p per business mile for public charging, with HMRC allowing apportionment where charging is mixed.
See the separate company Tesla business mileage guide for the AER rules. If you are comparing an employee-owned Tesla with a company Tesla, use the own Tesla vs company car guide.
Interactive calculator
See how 4%, 5%, 7% and 9% change the tax.
Enter the Tesla's P11D value and your marginal income-tax rate to estimate the taxable benefit and annual tax across four tax years.
Frequently asked questions
What is the BIK rate on electric cars in 2026/27?
A fully electric, zero-emission company car uses a 4% appropriate percentage in tax year 2026/27. That includes fully electric Tesla models.
How is electric car company tax calculated?
Broadly, the statutory price of the car plus qualifying accessories is adjusted where relevant, multiplied by the appropriate percentage, and the resulting company-car benefit is taxed as employment income.
Does salary sacrifice change the BIK calculation for an electric Tesla?
HMRC's optional-remuneration comparison does not apply to cars with CO₂ emissions of 75g/km or less. A fully electric Tesla therefore remains taxed under the normal company-car benefit rules.
Does a used Tesla have company car tax based on its current used price?
Normally no. Company-car benefit is based on the statutory list-price rules rather than simply the price paid for the used car.
Can low private mileage reduce BIK?
Normally not. Company-car benefit is based on availability for private use, not a simple count of private miles. Separate exemptions can apply where private use is genuinely prohibited and does not happen.
Official sources
- HMRC – Company car benefit appropriate percentages, 2026/27
- HMRC – Company car tax rates for 2028/29 and 2029/30
- HMRC – P11D company-car list price and accessories
- HMRC – Optional remuneration arrangements and low-emission cars
Tax the benefit. Track the journeys.
DriveQuery is being built to keep company-Tesla trip and charging history reviewable while payroll and tax calculations stay anchored to the correct HMRC rules.