How the benefit is worked out
The car benefit is the car’s list price, including options and VAT, less any capital contribution you made (up to £5,000), times the appropriate percentage for its CO2 emissions. You pay income tax on that benefit at your highest rate. You don’t pay National Insurance on it; your employer pays 15% Class 1A National Insurance.
Rates for 2026/27
| CO2 emissions | Electric range | Percentage |
|---|---|---|
| 0g/km (electric) | – | 4% |
| 1–50g/km | 130 miles or more | 4% |
| 1–50g/km | 70–129 miles | 7% |
| 1–50g/km | 40–69 miles | 10% |
| 1–50g/km | 30–39 miles | 14% |
| 1–50g/km | under 30 miles | 16% |
| 51–54g/km | – | 17% |
| 55–59g/km | – | 18% |
| 60–64g/km | – | 19% |
| 65–69g/km | – | 20% |
| 70–79g/km | – | 21% |
The figures are from HMRC’s ready reckoner for cars first registered from April 2020 (WLTP figures). The 75g/km line matters for salary sacrifice: cars above it are taxed on the salary you give up if that’s more than the benefit, so they rarely make sense that way.
Rates to 2029/30
Finance Act 2025 set the percentages for the next few years. For electric cars they rise by a point or two a year. From 2028/29 plug-in hybrids are no longer banded by electric range: every car from 1 to 50g/km pays the same rate.
| Tax year | Electric | 1–50g/km | 51–54g/km | 65–74g/km |
|---|---|---|---|---|
| 2026/27 | 4% | 4% to 16% by range | 17% | 20% to 21% |
| 2027/28 | 5% | See HMRC’s tables | ||
| 2028/29 | 7% | 18% | 19% | 22% |
| 2029/30 | 9% | 19% | 20% | 23% |
The jump for long-range hybrids is the big change: a hybrid with 130 miles of electric range goes from 4% in 2026/27 to 18% in 2028/29.
What it costs you
Take a £45,000 electric car with no capital contribution. In 2026/27 the benefit is 4%, £1,800. A basic rate taxpayer pays £360 of tax on it, and a higher rate taxpayer £720. By 2029/30, at 9%, the benefit is £4,050: £810 or £1,620 of tax a year. Your employer pays 15% Class 1A on the benefit each year.
Through salary sacrifice, the saving on the salary you give up usually more than covers that tax. On a £50,000 salary, sacrificing £400 a month for this car costs £318 a month after tax and National Insurance in 2026/27. Check how a long lease will look in later years, when the percentage is higher.
Other things that change the benefit
- Days unavailable. If the car isn’t available to you for part of the year, for example because you join part-way through, the benefit is cut in proportion. A gap of 30 days or more in a row also counts.
- Payments you make for private use. If you have to pay your employer for using the car privately, that reduces the benefit pound for pound.
- Fuel. Electricity isn’t treated as fuel, so there’s no fuel benefit charge for a fully electric car, even if your employer pays for charging at work. Fuel for a hybrid paid by the employer brings a separate charge.
- Optional extras. Accessories added later and costing £100 or more are added to the list price.
These are HMRC’s general rules for company cars. Our calculator assumes the car is available for the whole year, with no private-use payments.