Will electric cars still be cheaper to lease than petrol cars in 2026?

Yes, electric cars generally remain cheaper to lease when considering the total cost of ownership. Despite the new 3p per mile road tax and VED increases, the lower cost of electricity compared to petrol and the significantly lower BIK rates for business users provide substantial monthly savings. For example, a business driver in a 40% tax bracket will still pay significantly less in monthly BIK for an EV than for an equivalent petrol vehicle.

What is the ZEV mandate and how does it affect lease prices?

The Zero Emission Vehicle (ZEV) mandate is a UK regulation requiring manufacturers to ensure a certain percentage of their sales are zero-emission. In 2026, this target is set at 33% of total sales. This mandate often leads to more competitive lease deals on electric vehicles as manufacturers provide incentives to meet these regulatory targets and avoid heavy fines.

Do I have to pay the expensive car supplement on a used lease car?

The expensive car supplement applies to any vehicle with a list price over £40,000 for the first five years after its initial registration. If you lease a nearly-new or used car that is less than five years old and originally cost more than £40,000, the supplement will still be factored into the VED costs of the lease agreement. The supplement is based on the original list price when new, not the current market value.

How do I calculate BIK for an electric car in 2026?

To calculate BIK in 2026, multiply the P11D value of the car (the list price including VAT and options but excluding registration fees) by the 3% BIK rate for electric vehicles. Then, multiply this figure by your personal income tax bracket (e.g., 20% or 40%). This provides the annual tax amount you will pay for the benefit of the company car.

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

What is the primary trend for car leasing in 2026?

In 2026, car leasing will be defined by the standardisation of electric vehicle (EV) taxation and new road usage charges. As the UK moves toward banning new petrol and diesel sales, the government is aligning EV costs with internal combustion engines to preserve tax revenue. Consequently, zero-emission vehicles will lose their Vehicle Excise Duty exemption, while company car drivers will face updated Benefit-in-Kind rates.

Projected cost per mile for EV road use tax

£190

Standard VED rate for EVs from April 2025

33%

Required ZEV sales share for manufacturers in 2026

How will the new road-use tax for electric vehicles work?

A proposed road-use tax will introduce a mileage-based charge for electric vehicles to compensate for falling fuel duty revenue. Early projections indicate a rate of roughly 3p per mile for zero-emission models, ensuring road infrastructure remains well-funded. To determine this liability, drivers will likely report distance travelled via annual MOT checks or telematics systems built into modern lease cars.

For long-distance commuters used to near-zero running costs, this shift marks a significant change. Although the price per mile still beats fuel duty for combustion engines, this new fee alters total ownership calculations for high-mileage lease contracts. Fleet managers are already integrating these per-mile estimates into 2026 budgets to prevent unforeseen overheads.

3p/mile

The anticipated road-use tax rate for electric vehicles in the UK by 2026.

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What are the 2026 Vehicle Excise Duty (VED) changes?

Starting April 2025, electric Vehicle Excise Duty moves from zero-rated status to the standard annual rate. By 2026, EV leaseholders must pay the same £190 yearly fee as petrol and diesel motorists. Furthermore, any vehicle with a list price over £40,000 will attract an 'expensive car' supplement for its first five years of registration.

UK EV leasing tax and VED updates

Standard Rate Inclusion
EVs registered after April 2017 will pay the standard £190 annual VED rate from 2025 onwards.
Expensive Car Supplement
Vehicles with a list price over £40,000 attract an additional annual fee for five years.
First Year Rates
New EVs will pay a first-year rate of £10, followed by the standard rate in subsequent years.

How does the £50,000 BIK threshold affect business leasing?

The £50,000 Benefit-in-Kind (BIK) threshold serves as a tax boundary, determining what company car drivers pay based on emissions and list price. In 2026, EV BIK rates are set to rise to 3%, climbing from the previous 2% level. This incremental adjustment supports the government's strategy to bolster revenue as more electric company cars take to UK roads.

Maximise tax benefits when leasing

Comparison of Benefit-in-Kind (BIK) tax percentages by vehicle type and year.
Tax Year	EV BIK Rate	PHEV (1-50g/km) Rate	Typical ICE Rate
2024/25	2%	5% - 14%	25% - 37%
2025/26	3%	6% - 15%	25% - 37%
2026/27	4%	7% - 16%	25% - 37%

What are the essential steps for leasing a car in 2026?

Leasing a car in 2026

Leasing a vehicle in 2026 requires a focus on total cost of ownership including new tax liabilities and charging infrastructure. Drivers should first determine their average annual mileage to calculate the potential impact of the road-use tax. After choosing a vehicle, check the list price against the £40,000 VED supplement threshold to understand the full annual registration costs.

Verify the current Benefit-in-Kind percentage for your specific vehicle model year.
Calculate the expensive car supplement if the vehicle list price exceeds £40,000.
Assess home or workplace charging availability to mitigate higher public charging costs.
Review the lease contract for integrated maintenance packages that cover tyre wear, which is often higher on heavy electric vehicles.
Compare the total monthly cost including the 3p per mile road-use estimate against traditional fuel costs.

Our Take

We are observing a shift where fleet managers no longer view EVs as a tax haven but as a standard operational tool. The focus has moved from tax avoidance to operational efficiency and infrastructure reliability. This change necessitates a more detailed pre-lease analysis of energy tariffs and mileage patterns than was required in the previous decade.

Frequently Asked Questions

UK Manufacturer ZEV Mandate Targets 2024-2027

The transition to a mileage-based system is an inevitable evolution of the UK tax landscape as the transport sector decarbonises and traditional fuel duty receipts dwindle.
Summit Drive Analysis, 2024