Company Cars in 2025: What Employers Need to Know Now

Company car schemes have long been a staple of competitive reward packages—but with evolving tax treatment, sustainability priorities, and employee expectations, employers must reassess their offering.

Key Trends for 2025:

• Electric Vehicle (EV) Incentives: The shift to EVs continues, driven by low Benefit-in-Kind (BIK) rates. In 2025/26, BIK on fully electric vehicles remains at just 2% - a huge tax efficiency compared to petrol or diesel.

• Environmental Impact: Many businesses are aligning fleet choices with ESG goals, replacing traditional vehicles with EVs and hybrids.

• Flexible Mobility: Some firms are moving away from car allowances toward mobility budgets, giving employees choice over how they travel for work.

BIK Considerations:

• Cars are a taxable benefit. BIK rates depend on list price and emissions - meaning low-emission vehicles provide big savings.

• From 2026, EV rates are expected to rise gradually, so long-term planning is key.

Employer Actions:

• Review your fleet mix and explore salary sacrifice schemes for EVs.

• Communicate the true value of car benefits, especially around tax savings.

• Work with providers who can support green mobility and compliance.

At DCG, we help organisations develop cost-effective and sustainable company car policies that align with broader business and environmental goals. Through thoughtful planning and strategic alignment, we ensure this valued benefit supports both employee satisfaction and long-term sustainability commitments.