The Autumn Budget 2026 has confirmed company car tax rates for 2030/31, with every Benefit-in-Kind (BIK) band rising by one percentage point. Electric cars will move from 9% to 10%, while changes to capital allowances from 2027 bring further considerations for businesses planning their fleet costs.
Company car tax rates for 2030/31
BIK rates for 2030/31 will be one percentage point higher than in 2029/30 across every band:
- Electric cars: 9% rises to 10%
- Cars emitting 1 to 50g/km of CO₂: 19% rises to 20%
- All other bands: Increase by one percentage point, up to a maximum of 40%
The BIK rate for electric cars will rise from 4% in 2026/27 to 5% in 2027/28, 7% in 2028/29, 9% in 2029/30 and 10% in 2030/31.
For an electric company car with a P11D value of £40,000, a 40% taxpayer would see their annual BIK tax bill increase from £1,440 to £1,600 in 2030/31.
While the new rates provide greater certainty for businesses and drivers planning their next company car, the industry had called for the 9% rate for electric cars to continue through to 2031/32. Rates beyond 2030/31 remain unconfirmed.
Capital allowances
The Budget changes two capital allowance rates:
- First-year allowance: Rises from 40% to 50% for qualifying spending from 1 January 2027. It covers new plant and machinery, including assets bought for leasing, which can include commercial vehicles such as vans.
- Main writing-down allowance: Falls from 14% to 12% from 1 April 2027 for corporation tax, and from 6 April 2027 for income tax. This also applies to balances already in a business's capital allowance pools.
Full expensing for companies stays in place. Cars, second-hand assets, and overseas leasing are excluded from the first-year allowance, so car fleets only see the slower relief from the lower writing-down allowance, without the offsetting benefit.
What fleets should do now?
- Rebuild whole-life cost models using the 10% electric car BIK rate for 2030/31 and the lower writing-down allowance from April 2027.
- Operators that buy rather than lease, and those holding large pooled balances, should check their projections for the 2027/28 tax year.
- Remember that pay-per-mile tax (eVED) starts in April 2028 and will add to the running cost of electric cars and plug -in hybrid vehicles.
Frequently Asked Questions
The BIK rate for electric cars will be 10%.
No. The Budget set rates only up to 2030/31.
No. Cars are excluded, although plant and machinery for leasing is included.
The 12% rate applies from 1 April 2027 for corporation tax and 6 April 2027 for income tax.
