Electric cars, hybrids and double cab pick-ups: what business owners need to know from 2026

Electric cars remain attractive, but the benefit-in-kind rate is rising

For the 2026/27 tax year, a fully electric company car with zero CO2 emissions has a benefit-in-kind percentage of 4%. That is still very low compared with petrol and diesel cars, but it is an increase from the 2025/26 rate of 3%. In simple terms, the taxable benefit is calculated by multiplying the car’s P11D value by the relevant percentage, and the employee then pays income tax on that benefit at their marginal tax rate.

Hybrids: the electric range makes a big difference

Plug-in hybrids are more complicated because the rate depends on both CO2 emissions and the car’s electric-only mileage range. For cars with CO2 emissions between 1 and 50g/km in 2026/27, the benefit-in-kind percentage ranges from 4% for those with an electric range of 130 miles or more, up to 16% where the electric range is less than 30 miles. That means two hybrid cars with similar list prices can create very different tax bills.

The key point is not just whether a car is described as “hybrid”. The detail matters: list price, CO2 figure, electric-only range and the employee’s tax rate all feed into the real cost. Before choosing a vehicle, it is worth running the numbers properly rather than relying on headline figures from a brochure or lease quote.



Double cab pick-ups: most are now treated as cars for tax

For many years, double cab pick-ups with a payload of one tonne or more were often treated as vans for benefit-in-kind purposes. From 6 April 2025, HMRC changed its approach. The old payload-based test is no longer the main answer for employment tax. Instead, HMRC looks at the vehicle as a whole and considers whether it is primarily suited to carrying goods. In practice, most double cab pick-ups are expected to be treated as cars because they are suitable for both passengers and goods.

This can be a big change. A van benefit is based on a fixed annual amount, whereas a car benefit is usually based on the vehicle’s list price and CO2 emissions. As many double cab pick-ups have higher emissions, the benefit-in-kind charge can be much higher than employees and employers have previously been used to.

There are transitional rules. If an employer purchased, leased or ordered a double cab pick-up before 6 April 2025, the previous treatment may continue until the earliest of disposal, lease expiry or 5 April 2029.

VAT has not changed, but the overall picture has

The VAT treatment of double cab pick-ups has not changed in the same way. However, it is important not to assume that one tax rule automatically follows another. VAT, benefit-in-kind, capital allowances and business profit deductions can all point in different directions, so each purchase or lease should be checked on its own facts.

What should you do now?

• Review any company cars and pick-ups currently provided to employees or directors.
• Check whether any double cab pick-up falls within the transitional rules.
• Ask for the P11D value, CO2 figure and electric-only range before signing a lease or purchase agreement.
• Compare the employee tax cost and employer National Insurance cost before changing vehicles.
• Consider whether a fully electric vehicle, plug-in hybrid or cash allowance is the best fit commercially and personally.

We can help you make the numbers clear

Vehicle tax is one of those areas where a small detail can make a big difference. If you are thinking about changing your company car, introducing an electric vehicle scheme or replacing a double cab pick-up, speak to us before you commit. We can help you understand the tax cost, compare the options and make a confident decision for your business.

Call us on 01423 222710 or email info@wildandcoaccountants.co.uk