What is the BIK rate for electric cars in 2026?

The Benefit in Kind rate for fully electric cars is 4 percent for the 2026/27 tax year. It is scheduled to rise to 5 percent in 2027/28 and 7 percent in 2028/29. This remains much lower than the rates for petrol and diesel cars, which often exceed 25 percent.

Has the UK leasing fleet reached 2 million vehicles?

Yes, the UK vehicle leasing fleet officially surpassed 2 million vehicles in the first half of 2026. Data from the BVRLA confirmed a total fleet size of 2,052,673 vehicles by Q1 2026, representing a robust 12.9 percent year on year growth in certain sectors.

Why is Personal Contract Hire (PCH) declining in 2026?

Personal Contract Hire has seen a decline of approximately 4.3 percent to 7.6 percent because of sustained pressure on household finances. Many private drivers are choosing to extend their current lease agreements or are being attracted to manufacturer backed retail finance offers instead of independent leasing.

How does salary sacrifice for cars work?

Salary sacrifice is a scheme where an employee gives 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 before tax and National Insurance, it can lead to significant monthly savings for the employee, especially for high rate taxpayers.

What is the fastest growing part of the leasing market in 2026?

Used vehicle leasing is the fastest growing segment in 2026. Specifically, used Business Contract Hire contracts saw a 290 percent increase, while used vehicle salary sacrifice agreements rose by several thousand percent from a small initial base as more affordable second hand EVs entered the market.

What are the Emerging Trends in UK Car Leasing for 2026?

How is the UK car leasing market performing in 2026?

By 2026, the UK car leasing market surged to a record 2.05 million vehicles, marking a 7.2 percent annual growth for the total fleet. This expansion is largely fueled by corporate demand for electric vehicles. Despite tightening household budgets, commercial operators are increasingly adopting flexible funding solutions, such as salary sacrifice and Business Contract Hire.

Complete 2026 UK car leasing outlook

2.05m

Total UK Lease Fleet Size

290%

Growth in Used BCH Contracts

48%

EV Share of BCH Car Fleet

What is Business Contract Hire (BCH)?

As a long-term rental agreement, Business Contract Hire allows companies to use vehicles for a fixed monthly fee. It remains the preferred sourcing method for UK firms, primarily because it protects balance sheets from the risks of vehicle depreciation. April 2026 BVRLA data highlights this trend, showing a 6.1 percent annual growth in the BCH fleet as businesses prioritise predictable cash flow.

BVRLA Leasing Outlook report 2026

Fixed Monthly Costs
BCH provides businesses with certainty over their monthly automotive expenditure.
No Depreciation Risk
Leasing companies take the risk on the future value of the vehicle.
Vat Recovery
Vat registered businesses can often reclaim 50 percent of the Vat on monthly finance payments.

Why is used car leasing growing so fast?

Used car leasing provides a more affordable route for drivers switching to electric vehicles. In early 2026, used Business Contract Hire agreements saw a remarkable 290 percent year-on-year increase. This growth reflects rising confidence in long-term battery performance and a steady supply of three-year-old ex-lease vehicles entering the market.

The used vehicle market is four times the size of new. It underpins the entire zero emission ecosystem and is the single biggest factor that could undermine the UK transition.
Toby Poston, Chief Executive at BVRLA

Comparison of UK Leasing Sector Growth Rates in 2026
Lease Type	Year on Year Growth (2026)	Market Sentiment
Used BCH	290%	High Growth
Salary Sacrifice	165%	Rapid Expansion
Personal Contract Hire	-4.3%	Stagnant

How do 2026 Benefit in Kind (BIK) rates affect electric car leasing?

How to lease a car in 2026

For the 2026/27 tax year, Benefit in Kind (BIK) rates for fully electric cars are fixed at 4 percent. To drive zero-emission adoption, these rates will rise by 1 percentage point annually until 2028. Even with these scheduled increases, electric models remain far more tax-efficient than petrol or diesel cars, which can incur BIK charges as high as 37 percent.

Projected EV BIK Rates (2025-2029)

What are the latest electric vehicle market statistics for 2026?

In June 2026, battery electric vehicles (BEVs) achieved a 30 percent share of the UK new car market.
A record 86,120 new electric cars were registered in March 2026, a 24.2 percent increase on the previous year.
The two millionth electric car was registered in the UK in April 2026, marking a significant milestone for electrification.
Salary sacrifice schemes have become the fastest growing funding model, rising by almost 165 percent in Q1 2026.

Our Take

At Egon Car Leasing, we observe that the 290 percent surge in used BCH demonstrates a clear shift toward affordability. Many businesses are now opting for 24 month second life leases on premium EVs to test fleet suitability before committing to long term new vehicle contracts.