Last checked September 2026. Rates from HMRC. Figures are illustrations; your own tax depends on your income and the car’s exact list price.
If you get a company car, or you are thinking about a car through salary sacrifice, benefit-in-kind (BiK) tax decides what it really costs you. Electric cars are taxed at a tiny fraction of petrol cars, and several Chinese EVs and plug-in hybrids are among the cheapest company cars you can choose. Here are the rates, worked examples for popular models, and the big change coming for hybrids in 2028.
How company car tax works
You pay income tax on a percentage of the car’s list price, known as the BiK rate. The rate depends on CO2 emissions and, for plug-in hybrids, on how far the car can go on electric power. A basic-rate taxpayer pays 20% of the result, a higher-rate taxpayer 40%.
BiK rates for electric cars
| Tax year | Electric car BiK rate |
|---|---|
| 2025/26 | 3% |
| 2026/27 | 4% |
| 2027/28 | 5% |
| 2028/29 | 7% |
| 2029/30 | 9% |
BiK rates for plug-in hybrids (1-50g/km CO2)
| Electric range | 2026/27 | 2027/28 | 2028/29 | 2029/30 |
|---|---|---|---|---|
| 130 miles or more | 4% | 5% | 18% | 19% |
| 70 to 129 miles | 7% | 8% | 18% | 19% |
| 40 to 69 miles | 10% | 11% | 18% | 19% |
| 30 to 39 miles | 14% | 15% | 18% | 19% |
| Under 30 miles | 16% | 17% | 18% | 19% |
The 2028 cliff edge: from April 2028, plug-in hybrids lose their range-based rates and move to a single rate of 18%, rising to 19% the following year. A plug-in hybrid that is cheap to run as a company car today could more than double in tax. If you are choosing a car on a three or four-year agreement, factor this in. Existing agreements for newer plug-in hybrids tested under the latest Euro 6e-bis rules have some transitional protection; check with your employer.
What popular Chinese cars cost as company cars (2026/27)
| Car | List price | BiK rate | Tax a year (20% / 40%) |
|---|---|---|---|
| MG4 EV | £29,995 | 4% | £240 / £480 |
| BYD Seal Design | £45,730 | 4% | £366 / £732 |
| MG HS plug-in hybrid (75 miles) | £33,495 | 7% | £469 / £938 |
| Jaecoo 7 SHS-P (56 miles) | £35,170 | 10% | £703 / £1,407 |
| Jaecoo 7 SHS-H self-charging hybrid (125g/km) | £29,210 | About 31% | About £1,800 / £3,600 |
The difference is stark. The Jaecoo 7 self-charging hybrid, which cannot be plugged in, costs a higher-rate taxpayer around £3,600 a year, against £480 for an MG4. In 2028/29 the MG HS plug-in hybrid would rise to 18%, or about £1,200 a year for a basic-rate taxpayer.
Salary sacrifice: even bigger savings
With salary sacrifice, you give up part of your gross salary in exchange for a car, which saves income tax and National Insurance on the amount sacrificed. Combined with the low BiK rates on EVs, it is often the cheapest way to drive a new electric car. See our full salary sacrifice guide.
Which Chinese cars make the best company cars?
- Best low-cost EVs: MG4, BYD Dolphin and Leapmotor B10.
- Best long-range EVs: BYD Seal and XPeng G6.
- Plug-in hybrids until 2028: the MG HS, with its 75-mile electric range, sits in the lowest plug-in hybrid band available to most buyers.
Remember that the car must also make sense for your mileage and charging. See our charging guide.
Frequently asked questions
What is the company car tax rate for electric cars in 2026?
4% of the list price in 2026/27, rising to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30.
How much tax will I pay on an MG4 company car?
About £240 a year as a basic-rate taxpayer or £480 as a higher-rate taxpayer in 2026/27, based on a £29,995 list price.
Are plug-in hybrids still good company cars?
Until April 2028, those with a long electric range are taxed at 7% or less. From 2028/29, all plug-in hybrids move to 18%, which makes them far more expensive.
Do self-charging hybrids get low company car tax?
No. Self-charging hybrids such as the Jaecoo 7 SHS-H are taxed on their CO2 emissions like petrol cars, typically at around 30% for a family SUV.