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Company Cars

Company Cars Benefit-In-Kind Tax

The Benefit-in-Kind (BIK) tax system for company cars clearly incentivises the selection of zero or low tailpipe emission cars with a high battery range.

BIK rates are determined by a vehicle’s CO₂ emissions and its all-electric range.

Zero-emission cars (fully electric) currently attract a 2% rate in 2024/25, rising to 3% in 2025/26, then increasing by 1% annually to 5% by 2027/28, and further to 7% and 9% by 2028/29 and 2029/30.

Plug-in hybrids emitting 1–50g/km CO₂ with an electric range over 130 miles follow the same progression: 2% in 2024/25, 3% in 2025/26, then gradually up to 9% by 2029/30.

Other hybrids and petrol/diesel cars have higher rates, capped at 37% for vehicles over 170g/km CO₂.

This phased increase gives businesses and drivers a clear roadmap for planning fleet choices while reinforcing the shift toward cleaner vehicles

Phase-out of new petrol and diesel car sales in 2030

The Government has set the phase-out date for new petrol and diesel cars for 2030, with all new cars and vans to be fully zero-emission when driving by 2035.

The move is underpinned by a commitment of over £1.8 billion to support greater uptake of zero tailpipe emission vehicles for greener car journeys.

Between 2030 and 2035, new petrol and diesel cars and vans can be sold only if they have the capability to drive a significant distance with zero tailpipe emissions, for example plug-in hybrids, with the exact models to be defined at date of publication.

See table below, for a summary of low emission tax bands:

BIK tax bands for new zero
and low CO₂-emitting cars

CO₂ tailpipe emissions (g/km)
All-electric range (miles)
BIK tax 2025/26 (%)

0

N/A
3
.1-50
Over 130
3
.1-50
70-129
6
.1-50
40-69
9
.1-50
30-39
13
.1-50
Less than 30
15
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