Why electric company cars are so cheap to tax

Company car tax is based on the car's list price (P11D) multiplied by an 'appropriate percentage' set by its CO2 emissions.

For pure-electric cars that percentage is just 4% in 2026/27, against up to 37% for high-emission petrol or diesel. On a £45,000 EV that's a taxable benefit of £1,800 — around £720 a year for a higher-rate taxpayer.

Salary-sacrifice schemes let you fund the car from gross pay, which combined with the low BIK can make an EV markedly cheaper than buying privately from taxed income.

Watch the fuel benefit: if your employer pays for private fuel on a petrol or diesel car, the separate fuel-benefit charge is often more than the fuel is worth.