Choosing between an electric car and a petrol car in 2026 is no longer just about the environment — it is a hard financial decision. With fuel duty rising, EV charging tariffs falling, and company car tax still heavily favouring zero-emission vehicles, the running cost gap between the two has widened further this year.
Below is a comprehensive, pound-for-pound comparison covering every major cost category so you can see exactly where the money goes.
Cost Per Mile: Fuel vs Electricity
The single biggest difference in running costs comes down to what you put in the tank — or the battery.
Petrol prices in early 2026 sit at roughly 137–139p per litre. A typical family car returning 40–45 mpg works out at approximately 14–16p per mile in fuel alone. Drivers with less efficient cars can easily exceed 18p per mile, and the picture will worsen from September 2026 when the government begins phasing out the 5p fuel duty cut with staggered increases through to March 2027.
Electric running costs depend almost entirely on where you charge. The three tiers look like this:
- Off-peak home tariff (e.g. Octopus Intelligent Go at 7p/kWh): roughly 2–3p per mile
- Standard home rate (Ofgem cap ≈ 24.5p/kWh): roughly 6–8p per mile
- Public rapid charger (65–79p/kWh average): roughly 19–23p per mile
For the vast majority of EV drivers who charge overnight at home, the cost per mile is between a third and a half of what a petrol driver pays. Even on a standard home tariff the saving is substantial. Public rapid charging is the one scenario where an EV can match or exceed petrol costs, so it is worth factoring in how often you would rely on the public network.
Company Car Tax (BIK): The Biggest EV Advantage
For anyone running a company car, Benefit-in-Kind tax remains the strongest financial argument for going electric.
In 2026/27 the BIK rate for a pure battery-electric car rises to 4% — up from 3% last year and 2% the year before. It will climb by 1 percentage point each year until it reaches 9% in 2029/30. Even at 4%, compare that with a mid-range petrol car emitting 130 g/km CO2, which attracts a BIK rate of around 33%.
Worked example — P11D value £40,000, basic-rate taxpayer (20%):
| Petrol (33% BIK) | Electric (4% BIK) | |
|---|---|---|
| Taxable benefit | £13,200 | £1,600 |
| Annual BIK tax | £2,640 | £320 |
| Annual saving | — | £2,320 |
Higher-rate taxpayers save double. If your employer offers a salary sacrifice scheme, you also reduce National Insurance contributions, making the effective saving even larger. Our guide to electric car salary sacrifice UK explains the mechanics in detail.
Road Tax (VED) and What Changes in 2026
Since April 2025, electric cars are no longer exempt from Vehicle Excise Duty. Here is how the rates look in 2026/27:
- Standard rate (all cars registered after April 2017): £200 per year
- Expensive Car Supplement for EVs priced above £50,000 (threshold raised from £40,000 in April 2026): an extra £440 per year in years 2–6
- Petrol cars pay the same £200 standard rate, but the Expensive Car Supplement threshold stays at £40,000 — meaning more petrol models are caught
For an EV priced under £50,000, VED is identical to a petrol car at £200 per year. Above that threshold, EVs still benefit from the higher starting point. The real sting comes in 2028 when a new 3p-per-mile eVED charge is set to be introduced for battery electric vehicles, adding roughly £240 per year for the average 8,000-mile driver. Read more in our electric car road tax 2026 UK guide.
Insurance: The Gap Is Narrowing
Electric vehicles have historically been more expensive to insure, and that remains the case in 2026 — but the premium difference is shrinking. Current data shows the average EV policy costs roughly £700–£710 per year compared with about £555–£560 for a petrol equivalent, a gap of around £150.
The higher premiums reflect costlier battery repairs, longer repair times and a smaller pool of EV-specialist bodyshops. However, as the repair network grows and insurers gain claims data, the gap has already halved compared with 2023. Some models — notably the Vauxhall Corsa Electric — are now cheaper to insure than their petrol counterparts.
Servicing and Maintenance
Fewer moving parts mean lower workshop bills. An electric drivetrain has no engine oil, no exhaust system, no timing belt and no clutch. Regenerative braking also means brake pads last significantly longer.
- Typical petrol car annual service: £300–£550
- Typical EV annual service: £150–£300
Over a five-year ownership period, that difference adds up to roughly £750–£1,250 in favour of the EV. Tyre costs are broadly similar, though heavier EVs can wear through rubber slightly faster.
Total Cost of Ownership: A Worked Example
Bringing it all together for a 12,000-mile-per-year driver with a £40,000 car:
| Cost category | Petrol | Electric (home charge) |
|---|---|---|
| Fuel / electricity | £1,920 | £720 |
| VED | £200 | £200 |
| Servicing | £425 | £225 |
| Insurance | £560 | £710 |
| Running cost subtotal | £3,105 | £1,855 |
| Company car BIK (20% taxpayer) | £2,640 | £320 |
| Total inc. BIK | £5,745 | £2,175 |
For a company car driver, the annual saving is roughly £3,570. For a private owner (no BIK), the saving is around £1,250 per year — still enough to cover a decent family holiday.
Tracking those miles accurately matters. Tripbook automatically logs every business journey, making it straightforward to claim mileage at the correct HMRC advisory rate — 7p per mile for EVs charged at home, or 14p per mile for public charging — so you never leave money on the table.
Depreciation and Purchase Price
New EVs still carry a higher sticker price than equivalent petrol models — typically 15–20% more. However, two factors soften the blow:
- 100% First Year Allowance: Businesses buying a zero-emission car can deduct the full cost from taxable profits in year one, delivering a significant cash-flow advantage. See our capital allowances cars UK guide.
- Improving residual values: As demand for used EVs grows and battery longevity fears recede, depreciation curves are flattening for popular models.
The used EV market is also expanding rapidly, meaning many drivers can now enter electric ownership without paying the new-car premium at all.
What Is Coming Next?
Several policy changes on the horizon will affect the calculation:
- Fuel duty increase (September 2026): The 5p temporary cut begins unwinding — 1p in September, 2p in December, another 2p in March 2027 — pushing petrol costs higher.
- BIK rate rises: EV BIK climbs to 5% in 2027/28 and continues upward to 9% by 2029/30, though it remains far below petrol rates.
- Pay-per-mile eVED (April 2028): A proposed 3p-per-mile charge for BEVs, adding around £240/year for an average driver. More details in our pay per mile road tax UK 2028 overview.
- Enhanced home charger grants (April 2026): The government is nearly doubling the grant for home chargepoint installation, bringing the cost per mile for home charging even lower.
For anyone doing regular mileage — and especially company car drivers — the financial case for an electric car in 2026 remains strong. Use Tripbook to log every journey and ensure you are reclaiming the full advisory rate for each mile driven.
The Bottom Line
Electric cars are cheaper to run than petrol cars across nearly every category in 2026. Home charging slashes fuel costs by 50–80%, company car BIK tax savings run into thousands of pounds per year, and servicing bills are consistently lower. Insurance remains the one area where EVs cost more, but the gap is closing fast.
Whether you are a sole trader logging miles with Tripbook, a company car driver weighing up salary sacrifice, or a private owner crunching the numbers, the running cost advantage of going electric is now difficult to ignore.
Download Tripbook from the App Store to track every business mile automatically and claim back every penny you are owed.
