Quick answer for busy dentists (the short version)
If you run a limited company, an electric car is usually far more tax‑efficient than petrol or diesel because:
- Petrol and diesel company cars are often taxed at 30–40% Benefit In Kind (BIK)
- Electric cars are taxed at 4% BIK in 2026/27
- Electric car costs are paid from pre‑tax company income
- Paying personally via dividends creates significant tax leakage
- Even as BIK rises, EVs remain much cheaper for tax
For most dentist‑directors, switching to a company electric car can save thousands of pounds over the life of the car.
The rest of this guide shows you exactly how to calculate the BIK, check the HMRC list price using Comcar, and see how the tax cost rises year‑by‑year.
Electric car tax for dentists is something I’m being asked about more and more — especially by those running limited companies and thinking of ditching petrol or diesel.
“From a tax point of view, am I better sticking with petrol or diesel… or getting rid of it and switching to an electric car?”
And usually, once we run the numbers properly, the answer becomes pretty clear.
This isn’t really about environmental credentials.
It’s about how much tax leaks out of your company each year depending on the type of car you drive.
So let’s walk through it properly, in plain English.
Why petrol and diesel cars are tax‑inefficient
Petrol and diesel cars are heavily penalised under the company‑car tax rules.
If a petrol or diesel car is put through the company:
- Benefit‑in‑Kind (BIK) rates often sit at 30–40%
- You pay income tax on that benefit
- The company pays employer’s National Insurance
- Providing fuel makes things even worse
Because of this, many dentists avoid company petrol or diesel cars altogether.
Instead, they:
- Own the car personally
- Take dividends to pay for it
- Claim mileage allowances
The problem?
Dividends are already heavily taxed, so you lose a large chunk of income just to fund the car.
Why electric cars are treated very differently
Electric vehicles are one of the few areas where the tax system is genuinely favourable.
When a company provides an electric car:
- The costs are paid directly by the company
- Costs are corporation tax deductible
- You’re taxed only on a low BIK percentage
For the 2026/27 tax year, the electric car benefit in kind (BIK) rate is just 4%.
This is why electric car tax for dentists works so differently to petrol and diesel.
“How do I actually work out the BIK?”
A dentist asked me this recently:
“I understand EVs are tax‑efficient… but how do I actually calculate the benefit in kind? And what list price does HMRC use?”
So we worked through it step by step.
Step 1: Find the car’s P11D value (HMRC’s list price)
For company‑car tax, HMRC does not use what you actually pay for the car
Instead, they use the P11D value, which is:
- ✅ The manufacturer’s UK list price when new
- ✅ Including VAT
- ✅ Including factory‑fitted options
- ❌ Ignoring discounts
Think of it as the official brochure price, not the deal you negotiate.
How we use the Comcar website
To make this practical, we used the Comcar website.
Comcar lets you:
- Search specific EV models
- See the official P11D value
- Apply the current BIK rate
- Compare different cars side‑by‑side
We:
- Looked up each electric car the dentist was considering
- Checked the P11D value
- Applied the BIK percentage
- Compared how list price (not lease / purchase cost) affected the tax
It quickly showed which models were more tax‑efficient.
Step 2: Apply the electric car BIK rate
When looking at electric car tax for dentists, BIK is the key driver. For 2026/27, the BIK rate is 4%.
Example:
- P11D value: £54,000
- £54,000 × 4% = £2,160 taxable benefit
This is the figure HMRC uses for tax.
Step 3: Work out the tax cost
If you’re a basic‑rate taxpayer (20%) and you company pays the employers Class 1A National Insurance Contribution (NIC): 15%
- £2,160 × 35% = £756 per year
- About £63 per month
You’re not taxed on the full value of the car — only on the taxable benefit.
Important: second‑hand electric cars
This surprises a lot of dentists.
Even if the car is second‑hand, HMRC still uses:
👉 The original list price when the car was brand new
Not:
- What you paid for it
- Its current value
- The used‑car price
So for BIK purposes, new and second‑hand cars work the same way — the original P11D value always applies.
“But BIK is increasing – how much more will it cost?”
This is the next question I usually get.
So let’s look at the actual £ cost, including employer NIC, year‑by‑year.
Example assumptions
- Electric car P11D value: £54,000
- Basic‑rate taxpayer (20%)
- Employer Class 1A NIC: 15%
Electric car BIK costs over time (personal + company)
| Tax year | BIK % | Taxable benefit (£) | Personal tax (£) | Employer NIC (£) | Total tax cost (£) | Increase vs prior year |
|---|---|---|---|---|---|---|
| 2026/27 | 4% | £2,160 | £432 | £324 | £756 | – |
| 2027/28 | 5% | £2,700 | £540 | £405 | £945 | +£189 (+25%) |
| 2028/29 | 7% | £3,780 | £756 | £567 | £1,323 | +£378 (+40%) |
| 2029/30 | 9% | £4,860 | £972 | £729 | £1,701 | +£378 (+29%) |
What does that mean overall?
From the first year to the highest announced rate:
- Total annual tax cost rises from £756 → £1,701
- That’s an increase of £945 over 4 years
- A 125% increase over four years
That sounds big in percentage terms — but the cash cost is still modest compared to petrol or diesel cars.
Why electric still wins on tax
Even at 9% BIK, the total tax cost in this example is £1,701 per year.
A petrol or diesel company car in a 35–40% BIK band could easily create:
- Several thousand pounds per year in personal tax
- Plus higher employer NIC
- Plus no meaningful tax efficiency
Crucially, with an electric car:
- Car payments are made from pre‑tax company income
- You avoid extracting dividends just to fund a car
- Overall tax leakage is far lower
Bottom line for dentists
From a tax‑efficiency point of view, for most dentist‑directors:
- Petrol and diesel cars are expensive once tax is considered
- Paying personally via dividends creates significant tax leakage
- Company electric cars benefit from low BIK and tax‑deductible costs
- Even as BIK rises, EVs remain one of the most tax‑efficient motoring options available
That’s why we’re seeing so many dentists getting rid of petrol or diesel cars and switching to electric.
Thinking of changing your car?
If you’re a dentist running through a limited company and:
- currently drive a petrol or diesel car, or
- are unsure how electric car tax actually works,
it’s worth running the numbers properly before committing.
A short planning conversation — checking list prices, BIK, National Insurance and future rates — can save thousands of pounds over the life of the car.
If you’d like us to sanity‑check the figures based on your income, tax band and company profits, get in touch before you sign anything.
How do dentists find the correct list price for electric car BIK?
For company car tax, HMRC uses the P11D value, which is the manufacturer’s UK list price when the car was brand new.
This includes VAT and factory‑fitted options and ignores any discounts or lease deals.
Websites such as Comcar are useful for checking official P11D values and comparing models before committing.
How do dentists calculate Benefit‑in‑Kind (BIK) on an electric car?
To calculate electric car BIK:
1. Find the P11D list price
2. Multiply it by the electric car BIK percentage for that tax year
3. Pay income tax and national insurance on the resulting taxable benefit
For example, in 2026/27:
-£54,000 × 4% = £2,160 taxable benefit
-A basic‑rate 20% taxpayer pays £432 per year + £324 per year company national insurance
Does the same list price apply to second‑hand electric cars?
Yes.
When a company provides a second‑hand electric car, HMRC still uses the original list price from when the car was brand new.
The BIK calculation does not use:
-the second‑hand purchase price, or
-the current market value.
Do dentists have to pay National Insurance on electric company cars?
The dentist doesn’t pay National Insurance personally on the car benefit.
However, the company pays Class 1A National Insurance at 15% on the BIK value.
This is a company expense and is corporation‑tax deductible.
Does an electric company car need to be put through payroll?
Usually yes with details of your salary payments.
For the 2026/27 tax year, electric company car benefits cannot be payrolled unless HMRC was notified before the start of the tax year. If not reported on payrolled the car benefit is reported on an annual P11D
In most cases instead:
-The employer’s National Insurance (Class 1A NIC) is reported on a P11D(b)
-The Class 1A NIC is paid annually, regardless of whether benefits are payrolled or reported on P11Ds
This is normally handled by the dentist’s accountant as part of the annual compliance process, so it’s not something most dentists need to worry about day‑to‑day.
Will rising BIK rates make electric cars less tax‑efficient for dentists?
Electric car BIK rates are increasing gradually, but they remain far lower than petrol or diesel cars.
Even at future rates of 7%–9%, electric cars are usually still much more tax‑efficient for dentist‑directors than petrol or diesel vehicles taxed at 30%–40%.
