Does the BiK rate change mid-lease?

Yes. BiK rates are determined by the government for each tax year. Even if you signed your lease when the rate was 2%, you will pay the 3% rate in 2025/26 and the 4% rate in 2026/27 as long as you still have the vehicle.

Is BiK different for Personal Contract Hire (PCH)?

No. Benefit-in-Kind tax only applies to company cars provided by an employer. If you take out a Personal Lease (PCH) using your own post-tax income, you do not pay BiK tax.

What happens if my car delivery is delayed past April 6, 2026?

If delivery is delayed, you will be liable for the higher 4% BiK rate from the day the car is registered and made available to you. This is why Egon Car Leasing monitors lead times closely for all client orders.

Are plug-in hybrids (PHEVs) also increasing in tax?

Yes, PHEV BiK rates are also set to rise. However, they are heavily dependent on the vehicle's electric-only range. Cars with lower electric ranges will see much steeper increases than pure EVs.

Can I include maintenance in my lease to offset tax?

Including a maintenance package doesn't reduce your BiK, but for business users, it is a VAT-efficient way to manage total vehicle costs and ensure the vehicle remains in peak condition without unexpected expenses.

The April 2026 BiK Clock: Why Your Next Company Car Lease Starts Now

The United Kingdom's automotive taxation landscape is approaching a significant milestone on April 6, 2026. For fleet managers and company car drivers, this date marks the transition of Benefit-in-Kind (BiK) rates for zero-emission vehicles from 3% to 4%. While a 1% increase may appear marginal on paper, the cumulative impact on Total Cost of Ownership (TCO) and employee net take-home pay over a standard three-year Contract Hire agreement is substantial. At Egon Car Leasing, we view this transition as a critical planning window for businesses looking to optimize their vehicle procurement strategies before the new tax year begins.

What is the 2026 BiK Tax Increase?

Benefit-in-Kind (BiK) is a tax levied on employees who receive perks or 'fringe benefits' from their employers in addition to their salary, such as a company car. For electric vehicles (EVs), the BiK rate is currently set at 2% for the 2024/25 tax year, rising to 3% in April 2025, and subsequently reaching 4% on April 6, 2026. This phased increase was confirmed by the UK government to provide certainty for businesses while continuing to incentivize the transition to zero-emission transport.

1% Annual Rise

The UK Government has committed to increasing EV BiK by 1% each year until 2028 to maintain fiscal balance.

View source

Why February is the Strategic Deadline for Fleet Renewals

Comprehensive car lease guide

February represents the peak decision-making month for businesses aiming to secure vehicle delivery before the April tax hike. Because BiK is triggered upon the delivery and registration of the vehicle—not the date of the order—securing a vehicle currently in stock or with a short lead time is essential. If a vehicle is delivered on April 7, 2026, the driver is immediately subject to the higher 4% rate, whereas a delivery on April 1st locks in the 3% rate for the remainder of that tax year.

Lead Time Risk
Factory orders for bespoke specifications often exceed six months. Ordering in early 2026 risks pushing delivery into the new tax bracket.
Premium Availability
High-demand models from manufacturers like Audi, BMW, and Tesla often see stock depletion as the tax year-end approaches.
BVRLA Compliance
Egon Car Leasing ensures all contracts adhere to the latest BVRLA standards, providing a secure framework for your transition.

Calculating the Real-World Cost of the 4% BiK Rate

To understand the impact, one must look at the P11D value of the vehicle. The P11D value is the list price of the car, including VAT and any factory-fitted options, but excluding the first registration fee and annual road tax. The annual BiK tax is calculated by multiplying the P11D value by the BiK percentage rate, and then multiplying that figure by the employee's personal income tax band (20%, 40%, or 45%).

Comparison of BiK tax liabilities for 40% taxpayers across common premium EVs.
Vehicle Example (P11D: £45,000)	2025/26 (3% BiK)	2026/27 (4% BiK)	Monthly Increase (40% Tax)
Tesla Model 3 RWD	£540 / year	£720 / year	£15.00
BMW i4 eDrive35	£600 / year	£800 / year	£16.67
Audi Q4 e-tron	£630 / year	£840 / year	£17.50

EV BiK Impact Estimator (2026)

Compare your monthly tax liability between the 3% (2025) and 4% (2026) rates.

Vehicle P11D Value£45,000

Income Tax Band (%)40

Estimated Monthly BiK (at 4%)

£60.00 per month

The Long-Term Trajectory: BiK Rates to 2030

Transition to electric motoring

The 2026 increase is not an isolated event but part of a structured glide path toward 2030. The government has signaled that as EV adoption becomes the norm, the tax incentives will gradually normalize. For businesses entering into 48-month Business Contract Hire (BCH) agreements in early 2026, it is vital to forecast for the subsequent years of the lease.

Business Contract Hire (BCH) agreements

The transition to electric motoring remains the single most effective way for company car drivers to reduce their tax exposure. Even at 4% or 5%, the savings compared to a traditional internal combustion engine—which can attract BiK rates of 30% or more—are undeniable.
Egon Car Leasing Fleet Consultancy Team

Strategic Advantages of Business Contract Hire (BCH) in 2026

Business Contract Hire remains the preferred procurement method for UK SMEs transitioning to electric fleets. By utilizing BCH, companies can claim 50% of the VAT back on the monthly rental (or 100% if the car is used purely for business) and 100% of the VAT back on maintenance packages. As lead times fluctuate, Egon Car Leasing provides FCA-regulated guidance to help business owners lock in competitive initial rentals and fixed monthly costs before market volatility impacts vehicle residual values.

Our Take

While many brokers focus purely on the monthly rental price, we advise our clients to look at the 'Effective Cost of Ownership.' In 2026, the real 'win' isn't just a lower lease payment; it's the timing of delivery. A vehicle delivered in March vs. April can save a high-rate taxpayer hundreds of pounds in the first year alone. We are currently prioritizing 'In-Stock' allocations for our clients to ensure they beat the April 6 clock. Furthermore, we recommend looking at cars with lower P11D values but high-efficiency EV charging capabilities to offset the tax rise through reduced fuel/charging costs.

The Role of Salary Sacrifice in Mitigating Tax Rises

For employees concerned about the BiK rise, Salary Sacrifice remains an exceptionally powerful tool. Salary Sacrifice allows an employee to give up a portion of their gross salary in exchange for a non-cash benefit, such as a leased electric car. Because the deduction is taken from the gross salary (before tax and National Insurance), the savings often far outweigh the impact of the rising BiK rate. This remains one of the most effective ways for businesses to offer a 'pay rise' without increasing their overheads.

Frequently Asked Questions about 2026 BiK Changes

Conclusion: Proactive Fleet Management

The shift to a 4% BiK rate in April 2026 is a milestone in the UK's journey toward electrification. While the tax burden is increasing, electric vehicles remain the most tax-efficient choice for business travel. By acting in early 2026—or ideally, late 2025—business owners can navigate lead times, secure the best inventory, and ensure their transition to electric is both seamless and cost-effective. At Egon Car Leasing, we are driven by value and powered by service, helping you stay ahead of the legislative clock.