Electric vs petrol company car TCO in the UK: the real 2026 cost per mile over four years

Over four years and 40,000 miles, a mid-size electric company car costs a UK employer about 86p to 91p per mile all in, against about £1.03 per mile for an equivalent petrol car, in our worked example below. The gap comes from three lines: employer National Insurance on the benefit in kind, energy and maintenance. The electric car's rental and insurance are higher, and from April 2028 a new pay-per-mile duty will narrow the gap slightly.

This guide explains how to calculate whole life cost, sets out every assumption, gives the full line-by-line table in pounds, and tests what happens when drivers charge more in public, cover more miles or pay a standard tariff at home. Energy turns out to be the line with the widest spread between drivers, and it is the line Voltaback helps fleets control, by repaying home charging at each driver's real tariff.

What is the total cost of ownership of a company car?

Total cost of ownership (TCO), also called whole life cost, is everything a vehicle costs the business from delivery to return, divided by the miles it covers. It is the only fair way to compare an electric and a petrol car, because their costs sit in different places: the EV costs more to lease and insure, the petrol car costs more to fuel and to tax.

For a company car, TCO has two sides:

• The employer's cost: rental or depreciation, energy, maintenance, insurance, vehicle duties, employer Class 1A National Insurance on the benefit in kind, and the corporation tax effect of the car's tax treatment.
• The driver's cost: income tax on the benefit in kind, and any energy the driver pays personally.

A good TCO looks at both, because a car that is cheap for the company but expensive for the driver will not be chosen, and a car that drivers love but costs the company too much will not be offered.

How to calculate TCO: the formula

TCO per mile = (rental or depreciation + energy + maintenance and tyres + insurance + vehicle duties + employer NIC on BIK + tax adjustments + charging equipment) / miles over the period

Four rules make the comparison fair:

1. Same period and mileage for both cars: here 48 months and 40,000 miles.
2. Same use: the same split between home, public and business driving.
3. Real prices, dated: energy prices move every quarter; we give the date and source of each.
4. Separate the company's and the driver's costs, then look at both.

Contract hire or purchase?

Most UK fleets use contract hire: the lessor carries depreciation and residual value risk, and prices them into the rental. Road tax is normally included in contract hire rentals, and maintenance can be included or not. If you buy, replace the rental by depreciation and finance cost, and add capital allowances (below).

The assumptions in our example

Where the rentals come from: they are illustrative figures in line with published comparisons for mid-size cars in 2026, such as Right Fuel Card's monthly example (£450 electric, £400 petrol). Replace them with your own quotes, as they vary with brand, discounts and residual values.

Sources: Ofgem price cap, October to December 2026, Zapmap charging price index, Weekly road fuel prices, DESNZ, week of 2 November 2026, Right Fuel Card, electric vs petrol costs 2026.

Electric vs petrol TCO over four years: the full table

All figures are the employer's cost over 48 months and 40,000 miles, before corporation tax relief on deductible costs, except where stated.

On these assumptions, the electric car saves the employer about £5,150 to £7,030 over four years, or 12 % to 17 %. The driver saves far more, as the BIK section shows.

How each line is built is explained below, so you can swap in your own numbers, or run your fleet's energy line in the home charging cost simulator.

Rental

The EV's rental is higher because its list price is higher. Residual values for EVs have been volatile; in contract hire that risk sits with the lessor and shows up in the rental, which is one reason most fleets lease rather than buy EVs. VED is normally included in contract hire rentals: an EV now pays the standard rate of £200 a year like a petrol car, and neither car in our example exceeds the expensive car supplement thresholds (list price over £50,000 for an electric car, £40,000 for petrol or diesel).

Source: Vehicle tax rate tables, gov.uk.

Servicing and tyres

We use Electric Car Scheme's five-year estimate (£4,022 for an EV, £5,709 for a combustion or hybrid car), pro-rated to four years. EVs have fewer moving parts, no oil changes and less brake wear thanks to regenerative braking, but they can wear tyres faster because of their weight.

Source: Electric car running costs, Electric Car Scheme.

Insurance

EV premiums typically run 10 % to 15 % higher, mainly because of repair costs. We use £800 a year for the petrol car and £900 for the EV. Fleet policies are priced on the whole fleet, so check with your broker.

Home chargepoint

A 7 kW smart wallbox costs about £800 to £1,200 installed; we use £1,000. For a company car, a home chargepoint paid for by the employer is not a taxable benefit (s.239(4) ITEPA 2003). If the company buys it, chargepoint equipment qualifies for a 100 % first-year allowance until 31 March 2027 for corporation tax.

Sources: EIM23900, HMRC, First-year allowances, gov.uk.

The same comparison per month

Finance teams often think in monthly budgets. Spread over 48 months, the employer's cost is about £716 a month for the electric car on an EV tariff, £755 on the price cap, and £862 for the petrol car. The driver's income tax adds about £83 a month for the electric car and £373 for the petrol car, for a higher-rate taxpayer. Those monthly figures are what a car policy or a salary sacrifice quote should be compared with.

Scaling up: 50 cars

On a fleet of 50 such cars, the four-year gap between an all-petrol and an all-electric fleet is about £258,000 to £352,000 for the employer, depending on drivers' home tariffs, and about £696,000 in income tax for higher-rate drivers. The spread between the two electric columns, about £94,000 on 50 cars, is entirely due to home tariffs: it is the part of the saving that depends on how the fleet handles charging, not on which car it orders.

How much do 100 miles cost in an electric and a petrol car?

For the four-year table:

• EV energy: 40,000 miles x 0.32 kWh = 12,800 kWh. Home: 10,240 kWh at 8p = £819, or at 26.32p = £2,695. Public: 2,560 kWh at 79p = £2,022. Total £2,841 or £4,717.
• Petrol: 40,000 miles / 45 mpg = about 889 gallons, or 4,041 litres, at 172.78p = £6,982.

Two conclusions stand out. A rapid-charged mile costs more than a petrol mile, so the EV's advantage depends on how much charging happens at home. And within home charging, the driver's tariff changes the energy cost by a factor of more than three. The price per kWh guide explains what makes up each price.

From 1 October 2026 to 31 March 2027, domestic electricity in Great Britain is zero-rated for VAT instead of 5 %, which lowers home charging costs slightly further, while public charging keeps 20 % VAT.

Source: Revenue and Customs Brief 10 (2026), HMRC.

What taxes does an electric company car pay?

Benefit in kind and employer Class 1A NIC

The benefit in kind is the list price multiplied by the "appropriate percentage" for the car's CO2 band. The employer pays Class 1A National Insurance at 15 % on it; the driver pays income tax at their marginal rate.

The electric car's taxable benefit over four years is £40,000 x 25 % = £10,000, so Class 1A NIC is £1,500. The petrol car's is £35,000 x 32 % x 4 = £44,800, so Class 1A NIC is £6,720. We keep the petrol percentage flat, which is favourable to petrol: the government has announced a further 1 point increase on all bands for 2030 to 2031.

Sources: Company car benefit, appropriate percentages, HMRC, Company car tax rates for 2030 to 2032, HM Treasury, Rates and thresholds for employers 2026 to 2027, HMRC.

Vehicle Excise Duty and the new eVED

Since April 2025, electric cars pay VED like other cars: £10 in the first year, then the standard rate, currently £200. From 1 April 2028, a new Electric Vehicle Excise Duty (eVED) adds a mileage-based charge of 3p per mile for battery electric cars and 1.5p for plug-in hybrids, on top of VED, uprated with inflation from 2029 to 2030.

In our example, the last 24 months of the contract fall after April 2028, about 20,000 miles: 20,000 x 3p = £600. Expect lessors to pass it through or recharge it.

Source: Electric Vehicle Excise Duty (eVED), HM Treasury.

Corporation tax: lease rental restriction and capital allowances

• Leased cars: for cars emitting more than 50 g/km, 15 % of the lease rental is disallowed for corporation tax. On our petrol car, 15 % of £19,200 is £2,880 disallowed, which at a 25 % corporation tax rate costs about £720. Zero-emission cars are not restricted.
• Purchased cars: new zero-emission cars qualify for a 100 % first-year allowance until 31 March 2027 for corporation tax. Cars above 50 g/km go into the special rate pool at 6 % a year.

Sources: BIM47714, HMRC, First-year allowances, gov.uk.

VAT

On contract hire, a business that makes the car available for private use can usually recover only 50 % of the VAT on the rental, but all of the VAT on a separately invoiced maintenance element. This applies to electric and petrol cars alike, so it does not change the comparison. The guide to electric company car taxation covers VAT and capital allowances in more detail.

The benefit in kind: the line most comparisons forget

Many TCO comparisons stop at the employer's costs. But a company car is first a benefit for the driver, and the driver's tax bill often decides the choice.

A driver choosing the electric car keeps about £13,900 over four years. For a basic-rate taxpayer, the figures halve, but the gap remains large. This is why electric cars dominate company car choice lists and salary sacrifice schemes, and why the energy question becomes the driver's main concern once the car is chosen.

And the electricity for private miles?

For an electric company car, the employer can repay all the electricity used to charge the car at home, private miles included, with no tax or NIC for anyone (s.239(2) ITEPA 2003, EIM23900). Electricity is not fuel for the car fuel benefit charge. For a petrol car, paying for private fuel triggers the car fuel benefit charge unless the driver repays it, so most fleets pay business fuel only.

In our table, we count the energy for all 40,000 miles for both cars, to compare the vehicles' real running cost. If your petrol policy pays business fuel only, the petrol energy line paid by the company is lower, but the driver pays the rest out of taxed income.

Sensitivity: what changes the result

More public charging

Even a driver who only uses rapid chargers ends up at roughly the same cost as petrol, because the tax and maintenance savings carry the EV. But every 10 points of public rapid charging costs about £900 over four years. Knowing where each car charges is the first lever.

A standard tariff at home

Moving every home kWh from 8p to the price cap rate of 26.32p adds about £1,876 per car over four years. On a fleet of 100 cars, that is close to £190,000. The energy line is the one with the widest spread between drivers: the same car, the same miles and a different tariff can triple the home charging cost.

Higher mileage

At 80,000 miles over four years, the energy gap per mile (about 7p for the EV in our mix, about 17.5p for petrol) applies to twice as many miles, and eVED doubles to about £1,200. The rentals rise for both cars. The EV's advantage per mile grows, because the fixed tax savings stay the same and the variable energy saving doubles.

Residual values

In contract hire, the lessor carries residual value risk and prices it in. If you buy, a weaker EV residual value can erase part of the saving: on a £40,000 car, every 5 points of residual value is £2,000. That is the main reason to lease EVs or to buy with a buy-back agreement.

Home charging: how to optimise the energy line

The energy line is the one a fleet controls most directly once the car is chosen. Three decisions shape it:

1. Where the car charges. Home charging at 8p to 26p per kWh, against 54p to 79p in public. Every session moved home saves money.
2. At what tariff. An EV tariff cuts the home cost by about two thirds compared with the price cap rate.
3. How the company pays for it. A flat rate per mile, such as HMRC's advisory electricity rate of 7p per business mile for home charging, pays about 21.8p per kWh at our consumption: too much for drivers on an EV tariff, too little for those on the price cap, and nothing for private miles. Repaying the real cost of each session pays exactly what was spent.

Voltaback reads each home charging session from the car, for more than 48 brands, values it at the driver's tariff at the time of charging and gives payroll one monthly export. Voltaback relies on the home's MID-certified meter, not on a standalone cable meter, for the household price, and the company never receives the car's location. For fleet managers, the result is an energy line that is measured rather than estimated.

Source: Advisory fuel rates, HMRC.

Public charging: card or reimbursement?

The public share of energy is the most expensive one, so how it is paid matters:

• A company charge card is not a taxable benefit for a company car, gives the fleet one invoice with recoverable VAT, and lets you see every session and its price. Negotiated or subscription rates on some networks can bring the price per kWh well below the pay-as-you-go average.
• Reimbursing drivers for ad hoc public sessions is simpler to start but creates expense claims, receipts and no visibility on where and why drivers use rapid chargers.

Most fleets combine both: a card for public charging, and home charging repaid at the driver's tariff. Reviewing the public share per driver each quarter shows who would benefit from a home charger or workplace charging.

Electric or petrol company car in 2026: which to choose?

For most UK company car drivers, the question is no longer whether to go electric, but how to make the running costs fair and predictable. The guide to greening a company fleet covers the transition plan.

Leasing an electric car: points to check in the contract

Contract hire puts most of the TCO in one monthly figure, so the contract terms matter as much as the rental:

• Mileage band and excess rate: set the band from the driver's real mileage; excess rates are set per vehicle and tend to rise with the list price.
• Maintenance package: EV servicing is cheaper, so check that a maintained rental reflects it.
• eVED from April 2028: ask how the lessor will handle it (pass-through, recharge, or built into the rental) for contracts running beyond that date.
• Battery and return conditions: what the lessor checks at return, and how fair wear and tear applies to charging ports and cables.
• Charging cable and home charger: whether a cable is included, and who owns a home charger at the end of the contract.

The guide to leasing electric company cars covers contract hire, salary sacrifice and their tax treatment.

Salary sacrifice: the same car, a different cost split

Under salary sacrifice, the employee gives up part of their gross salary in exchange for the car. The employer usually saves 15 % employer NIC on the sacrificed salary and pays Class 1A NIC on the much smaller benefit in kind. Cars emitting 75 g/km or less are outside the optional remuneration rules, which is why electric cars dominate these schemes. The TCO lines are the same, but who carries each one changes: the rental is funded by the sacrifice, while energy is still outside the package, so home charging still needs a reimbursement policy.

Plug-in hybrids: TCO depends on the plug

A plug-in hybrid sits between the two columns, and where it lands depends on one behaviour: whether the driver charges it.

• Charged daily at home, most short trips run on electricity at 2.6p to 8.4p per mile, and the PHEV's TCO approaches the EV's on energy, though not on BIK.
• Never charged, it runs as a heavier petrol car, often with worse economy than a conventional model, and its official CO2 figure says nothing about real emissions.
• eVED will apply at 1.5p per mile from April 2028.
• BIK depends on the electric range: from 4 % for 130 miles or more to 16 % for less than 30 miles in 2026 to 2027, and it rises faster than for battery electric cars in later years.

The only way to know which PHEVs are charged is to measure charging sessions per car. The same data then supports reimbursing their home electricity at the real cost, which is tax free for company cars.

The hidden costs of a fleet

Beyond the table, several costs are often missed:

• Excess mileage charges at the end of contract hire, when cars run over their band.
• End-of-lease damage charges, beyond fair wear and tear.
• Public charging premiums: ad hoc payment at rapid chargers, without a card or a negotiated rate.
• Uncharged plug-in hybrids, running on petrol at a higher cost than planned.
• Administration: expense claims for charging, mileage logs, chasing odometer readings.
• Downtime: a car off the road while waiting for parts or a repair.
• Driver time spent at public chargers on business days.

None of these appears on the lessor's quote, and all of them depend on data you can measure each month.

Build your own TCO in six steps

1. Collect quotes for the electric and petrol models you are comparing, on the same term and mileage band, with and without maintenance.
2. Take the list prices and CO2 bands to calculate BIK and Class 1A NIC for each tax year of the contract.
3. Estimate the charging split from real data if you already have EVs, or from drivers' access to home charging if you do not.
4. Use the drivers' real tariffs for home charging, not a single average, and current public prices from an index such as Zapmap's.
5. Add the duties and tax adjustments: VED if not included, eVED from April 2028, the lease rental restriction for cars above 50 g/km.
6. Test the sensitivities: public share, tariff, mileage and residual value, and look at the driver's side as well as the company's.

Update the energy assumptions every quarter, when the Ofgem price cap and HMRC's advisory rates change. Keep the model in one shared spreadsheet so fleet, finance and HR work from the same figures.

Common mistakes in TCO comparisons

• Comparing rentals only. The rental is the largest line, but it hides the tax and energy differences that decide the result.
• Using one electricity price for the whole fleet. Drivers' home tariffs range from about 7p to over 26p per kWh, a spread larger than the difference between some car models.
• Ignoring the public charging share, or assuming it is the same for every driver.
• Leaving out employer Class 1A NIC, which is often the second biggest difference between electric and petrol cars.
• Forgetting eVED for contracts that run beyond April 2028.
• Using official consumption figures instead of real ones: winter, motorway speeds and charging losses raise kWh per mile.
• Looking only at the company's side, when the driver's benefit in kind tax often decides which car is actually chosen.
• Treating the comparison as final. Energy prices, advisory rates and tax bands change every quarter or every year; revisit the model at each renewal round.

How to reduce your fleet's TCO

1. Measure where each vehicle charges

Split home, workplace and public charging per car each month. A driver on 50 % public rapid charging costs about £2,700 more over four years than one on 20 %, in our example.

2. Repay home charging at the real cost

Real-cost reimbursement removes the over-payment to drivers on cheap tariffs and the under-payment to others, and it can cover private miles tax free. On our assumptions, it is also often cheaper for the employer than a flat rate per mile.

3. Choose PHEVs only where they will be charged

A plug-in hybrid's TCO depends entirely on its electric share. Check charging data in the first months, and move drivers who never plug in to a battery electric car at renewal.

4. Track eco-driving and maintenance

Consumption per mile varies by 20 % or more between drivers of the same model. Monthly indicators and alerts keep servicing on time and consumption in check; the eco-driving guide covers what to measure.

5. Size workplace charging to real needs

Workplace charging helps drivers without home charging, and the Workplace Charging Scheme pays up to £500 per socket for up to 40 sockets until 31 March 2027. Size it on measured demand, not on the headcount.

Source: Electric vehicle chargepoint grants, gov.uk.

What it changes in practice

On a typical mid-size company car, choosing electric saves the employer about £5,000 to £7,000 over four years and the driver about £14,000 in tax, in our example. Most of the employer's saving is locked in at the order, through tax and maintenance. The part that stays open for the life of the car is energy: where it charges, at what tariff, and how the company pays for it.

That is the line worth measuring every month. For the fleet manager, Voltaback's fleet manager page shows how measured home charging and mileage fit together.

Calculate your fleet's TCO

The table above is a starting point. Your rentals, mileage, charging split and drivers' tariffs will move it, and energy is the line that moves most.

Estimate your fleet's home charging line with the home charging cost simulator, or talk to our team to measure it on your own cars.