Navigating Company Car & VED Tax Changes for 2026/27
The landscape for company vehicles is shifting. As of 6 April 2026, over 700,000 employees are seeing a change in their tax liabilities. From rising Benefit-in-Kind (BIK) rates to the introduction of VED for electric vehicles, it is more important than ever to understand the P11D implications of your fleet.
At Zyla Accountants, we’ve broken down the key updates to help you manage your costs effectively this tax year.
2026/27 BIK Rates at a Glance
The Shift in Benefit-in-Kind (BIK)
The BIK charge is determined by the car’s P11D value (the list price including VAT and extras, regardless of the price actually paid) multiplied by a percentage based on CO2 emissions.
Electric Vehicles (EVs): The rate has stepped up from 3% to 4%. While still the most tax-efficient option, this marks a steady upward trend.
Low-Emission Cars (1–50g/km): These are now taxed between 4% and 20%.
The 1% Increase: Most vehicles emitting under 75g/km will see a 1% rise this year.
High-Emission Cap: The maximum BIK rate remains frozen at 37% (applicable to petrol cars over 155g/km and diesels over 135g/km) until April 2028.
| Category | 2026/27 Rate / Value |
|---|---|
| Electric Vehicles (EV) | 4% BIK |
| Low Emission (1-50g/km) | 4% - 20% BIK |
| Van Benefit Charge | £4,170 |
| Car Fuel Multiplier | £29,200 |
Van & Fuel Benefit Increases
Following the Consumer Price Index (CPI), benefit charges for fuel and vans have also seen an uplift:
Van Benefit Charge: Increased to £4,170.
Van Fuel Benefit: Increased to £798.
Car Fuel Multiplier: Now stands at £29,200.
Note: Zero-emission vans maintain a nil BIK rate, remaining a strong incentive for businesses.
New VED (Road Tax) Rates
Vehicle Excise Duty (VED) for 2026
For the first time, electric vehicles are being integrated more fully into the VED system. The "First Year Rate" is now applicable to ensure consistency across all fuel types.
| CO2 Emissions (g/km) | April 2026 First Year Rate | Uplift |
|---|---|---|
| 0 (Electric) | £10 | £0 |
| 1 - 50 | £115 | +£5 |
| 91 - 100 | £365 | +£15 |
| 151 - 170 | £1,410 | +£50 |
| 191 - 225 | £3,420 | +£120 |
The "Expensive Car" Supplement
If you are registered a high-value vehicle, be aware of the additional supplement payable from years two to six:
EV Threshold: In a positive move for electric adoption, the threshold for EVs has risen from £40,000 to £50,000.
ICE/Hybrid Threshold: Remains at £40,000.
The Cost: The supplement itself has risen to £440 per year.
| Vehicle Type | Renewal VED (Standard Rate) | Expensive Car Supplement (>Threshold) |
|---|---|---|
| Electric Cars | £200 | £440 (if over £50k) |
| Hybrid/Petrol/Diesel Cars | £200 | £440 (if over £40k) |
| All Vans (Inc. Electric) | £360 | N/A |