Besides other vehicle taxes such as Vehicle Excise Duty, BIK Rates are significant to the driver of the vehicle and are chiefly CO2-based. These extra costs to businesses and their drivers have led to a substantial increase in the number of electric and hybrid cars being leased.
This adjustment coincided with the implementation of a new set of BIK rates designed to encourage the use of pure-electric vehicles. Until the end of March 2025, pure EVs are now rated at 2%. PHEVs continue to earn exceptionally cheap rates, but they are now evaluated based on their pure-electric range. Those who can travel longer distances on electric power pay a lesser BIK charge.
BIK rates for company cars currently start at 2% for electric cars, 23% for the cleanest hybrids, and 25% for any car with 100 g/km CO2. Bands climb in 1 percent increments from 14 percent to a maximum of 37 percent, with diesel vehicles subject to a 4% addition increase if they do not meet RDE2 testing.
The UK Government changed the CO2 measurements used to determine tax rates from the old NEDC data to the new WLTP data in April 2020. As a result, there was a transition period during which two sets of BIK rates were used: one for vehicles registered before April 6, 2020, and the other for those registered after that date. Please keep in mind that a vehicle's BIK rate is determined by its registration date.