25/03/2026
Benefit in Kind (BiK) tax changes for company cars for the 2026–27 tax year
The BiK tax changes for company cars for the 2026–27 tax year have been confirmed. These updates have now been published through government and industry sources and these changes will affect the tax collected on some benefits, particularly those operating electric or hybrid vehicles.
Key changes for 2026–27
Electric vehicle (EV) BiK will increase to 4% from April 2026 (up from 3% in 2025–26). This is part of the government’s multi‑year plan, which increases EV BiK by 1 percentage point each year until 2028. Petrol, diesel, and hybrid vehicles will continue to attract higher BiK rates, with the most polluting bands reaching up to 37%.
2026–27 BiK Rates
Ultra‑Low Emission Vehicles (1-50 g/km CO2)
Rates depend on electric-only driving range.
| CO2 (g/km) | Electric Range (miles) | 2026–27 BiK % |
| 1–50 | ≥130 | 4% |
| 1–50 | 70–129 | 7% |
| 1–50 | 40–69 | 10% |
| 1–50 | 30–39 | 14% |
| 1–50 | <30 | 16% |
Vehicles with CO2 Emissions of 51+ g/km
Standard WLTP bandings as set by HMRC.
Vehicles with CO2 Emissions of 51+ g/km
Standard WLTP bandings as set by HMRC.
| CO2 Band (g/km) | 2026–27 BiK % |
| 51–54 | 17% |
| 55–59 | 18% |
| 60–64 | 19% |
| 65–69 | 20% |
| 70–74 | 21% |
| 75–79 | 21% |
| 80–84 | 22% |
| 85–89 | 23% |
| 90–94 | 24% |
| 95–99 | 25% |
| 100–104 | 26% |
| 105–109 | 27% |
| 110–114 | 28% |
| 115–119 | 29% |
| 120–124 | 30% |
| 125–129 | 31% |
| 130–134 | 32% |
| 135–139 | 33% |
| 140–144 | 34% |
| 145–149 | 35% |
| 150–154 | 36% |
| 155–159 | 37% |
| 160–169 | 37% |
| 170+ | 37% (capped) |
Company vans
HMRC has confirmed that van benefit charges are increasing in line with CPI from April 2026:
- Van BiK (flat‑rate) for private use: £4,170 (up from £4,020)
- Van fuel benefit charge: £798
Private‑use fuel for Company Cars (Fuel Benefit Charge)
Employees who receive employer‑provided fuel for personal mileage must pay a BiK based on the car fuel benefit multiplier, which increases to £29,200 for 2026–27. Check future rates for petrol powered and hybrid powered company cars.
This multiplier is used in the following formula:
Car Fuel Benefit BiK = £29,200 × (Car BiK % based on CO2 band)
Example: A petrol car with a 28% BiK rate → fuel BiK = £29,200 × 28% = £8,176 taxable benefit.
What this means for you
Employees should be aware that the small BiK percentage increase will affect their net pay.
If you have any queries, please don’t hesitate to contact George Vass on 023 8046 1250 or email George Vass.