Company Car Tax Rates Hold Steady, But EV Advantage Remains Clear

Company car tax rates have been confirmed for the next few years, with ultra-low and zero-emission vehicles continuing to benefit from significantly lower benefit-in-kind percentages than petrol and diesel equivalents. Electric cars remain taxed at just two per cent of list price for 2024/25, rising gently to three per cent in 2025/26 and five per cent by 2027/28. By contrast, conventional internal combustion engine cars sit in bands ranging from 20 to 37 per cent depending on CO2 emissions, making the EV advantage stark.

For businesses operating company car schemes or considering salary sacrifice arrangements, the tax position makes electric vehicles a compelling choice for eligible drivers. The combination of low BIK, zero fuel benefit charge and reduced National Insurance contributions can save both driver and employer thousands of pounds per year. However, the window of maximum advantage is narrowing as EV tax rates gradually rise, and supply lead times for some models remain extended.

Fleet managers should review replacement cycles and driver demand now, prioritising EV adoption for high-mileage drivers and those in higher tax bands where the savings are greatest. Salary sacrifice schemes in particular are seeing strong uptake, driven by the tax efficiency and the fact that drivers can access newer, better-specified EVs than they might afford personally. Charging infrastructure and total cost of ownership remain important considerations, but the tax case is clear and time-limited.

Bluepoppy helps businesses transition to electric company cars with tailored leasing, salary sacrifice scheme design and charging planning. Our Fleet Cost Review includes a full tax and TCO comparison to show you where EVs deliver savings and where they don't. If you're reviewing your company car policy or considering a switch to salary sacrifice, we'll give you the numbers and the support to make it work for your team and your budget.

Bluepoppy view: Company car tax still heavily favours EVs—plan your replacement cycle now before rates rise further.

Source: i-FM — summarised and written from a Bluepoppy perspective. We don’t reproduce the original article.