Should the employer provide a company car or should the employee use their own car for business travel?

A common question for employers is on the subject of the provision of a company car, and the issue will typically arise when the employer is negotiating a contract with a new or promoted employee, or an existing employee may be nearing the end of their contract period for a company car and it is opportune to review the options available.

Tax and choice remain the two dominant forces in the company car market. Electric vehicles have reshaped the landscape almost entirely, driven by the sharp disparity in benefit-in-kind (BIK) tax rates compared with petrol and diesel alternatives. The current BIK rate for a fully electric vehicle sits at 4% for 2026/2 (rising to 9% by 2029/30), against rates of 23% – 37% for diesel/petrol cars. That gap continues to deliver a compelling financial case for both employer and employee; and according to HMRC’s Benefits in Kind statistics, electric vehicles now account for a majority of company