Drivers face car tax rise with bills soaring from April 2026

Electric Vehicles: A Smart Move Amidst Tax Changes?

Big news for UK drivers: starting April 2026, car buyers will face a 1% increase in the Benefit-in-Kind (BIK) tax, impacting both traditional petrol, diesel, and hybrid cars. But there’s a silver lining for those eyeing electric vehicles (EVs). EVs continue to enjoy the lowest BIK tax rates, although they will see a gradual increase over the next few years.

If you're part of the company car scene, here's the scoop: for the 2025/26 tax year, BIK rates for electric cars are set at a very attractive 3%. This is a significantly lower rate compared to what you might see with petrol or diesel alternatives. However, come April 2026, this rate will rise to 4%, and continue to increase incrementally, reaching 9% by 2029/30. According to Thom Groot, CEO of The Electric Car Scheme, this gradual increase provides the certainty needed for drivers to make informed decisions about their next vehicle.

What This Means For You

So, why should this matter? Whether you’re a business or an individual considering your next car, understanding these tax changes could save you money. For those in Greater Manchester and other parts of the UK, moving towards an electric company car can be a strategic decision, not just to benefit from lower taxes now but also to minimise future expenses.

These adjustments are particularly relevant for company cars as they align lease terms – typically three or four years – with predictable tax rates. This means less guesswork and potentially better financial planning. As most company cars eventually become available on the second-hand market, what this shift in the company sector does is set the stage for a broader transition to EVs across the board.

Time to Consider an Electric Vehicle?

If you've been on the fence about when to switch to an electric vehicle, the time to act might be now. Here at The Car Co on Manchester Road, Bury, we’re already seeing customers increasingly drawn to our varied selection of EVs. Not only are these vehicles smarter for the environment, but, given the rising costs associated with traditional cars, they could also be a wiser financial choice.

While the BIK tax provides immediate savings for EV drivers, don't forget the long-term benefits like reduced fuel costs and fewer maintenance headaches compared to petrol and diesel cars. Plus, our competitive finance deals - starting from 8.9% APR - make these eco-friendly vehicles more accessible than ever.

Should You Act Now or Wait?

With the tax landscape shifting gradually, acting sooner rather than later might be advantageous. Given the increase from 3% to 9% over the next few years, locking in a lower rate now could mean substantial savings over the life of your vehicle.

Thinking about making the switch to electric? We’re here to help you explore your options. Pop into The Car Co for a chat about how we can make your transition to an eco-friendly vehicle smooth and cost-effective.

In summary, the recent tax changes are a wake-up call for motorists to consider their future driving options. Whether you're looking to buy a new company car or pondering the switch to electric, the advantages are clear: lower immediate costs and a smarter long-term investment. Why not drop by The Car Co and let’s discuss how these changes could benefit you?