Is Electric Car Leasing Still Worth It in 2027? UK Costs, Tax Changes and Leasing Guide
Published: 3 November 2026 | By Aaron Walker | Applied Leasing
Is electric car leasing still worth it in 2027? Electric car leasing remains an option for UK motorists and businesses, although its overall value depends on vehicle costs, charging arrangements, mileage and the terms of the agreement.
Electric vehicles can offer lower energy costs than petrol vehicles in certain circumstances, particularly where affordable home charging is available. Fully electric company cars also benefit from comparatively low Benefit-in-Kind (BiK) tax rates.
However, higher public charging costs, insurance, maintenance, contractual charges and future taxation can affect the total cost.
The government plans to introduce a mileage-based Electric Vehicle Excise Duty (eVED) from April 2028. This could become relevant during longer electric vehicle leases beginning in 2027.
This guide explains the main costs, advantages, limitations and tax changes associated with electric car leasing in the UK.
Electric Car Leasing in 2027: At a Glance
| Consideration | Key information |
|---|---|
| Monthly rental | Depends on the vehicle, term, mileage and initial rental |
| Home charging | May offer lower electricity costs |
| Public charging | Prices vary by provider, location and charging speed |
| Company car tax | Zero-emission BiK rate of 5% for 2027/28 |
| Planned mileage tax | eVED proposed from 1 April 2028 |
| Vehicle Excise Duty | Existing VED rules also apply to electric cars |
| Maintenance | EVs require routine maintenance, despite fewer conventional engine components |
| Depreciation | Under standard contract hire, the customer normally returns the vehicle rather than selling it |
| Contract restrictions | Mileage, condition and early termination conditions apply |
Explore Electric Car Leasing Offers
1. What Is Electric Car Leasing?
Electric car leasing allows a customer to use an electric vehicle for an agreed period in exchange for contractual rental payments.
Under standard Personal Contract Hire (PCH) or Business Contract Hire (BCH), the vehicle is normally returned to the finance provider at the end of the agreement.
Contracts typically specify:
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The initial rental.
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Subsequent monthly rentals.
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Contract length.
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Annual or total mileage allowance.
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Vehicle maintenance responsibilities.
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Return conditions.
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Additional charges that may apply.
Standard contract hire does not normally provide a contractual option to purchase the vehicle.
2. How Much Does It Cost to Charge an Electric Car?
Electricity costs vary depending on the vehicle's efficiency and the charging tariff.
For illustration, the calculations below assume an electric car consumes 18kWh per 100km, equivalent to approximately 0.2897kWh per mile, excluding charging losses.
Illustrative Charging Costs
| Charging arrangement | Electricity price | Cost per 100 miles | Cost for 10,000 miles |
|---|---|---|---|
| Hypothetical low-cost home tariff | 10p/kWh | £2.90 | £290 |
| Ofgem October–December 2026 reference | 26.32p/kWh | £7.62 | £762 |
| Hypothetical standard public charging | 55p/kWh | £15.93 | £1,593 |
| Hypothetical rapid public charging | 80p/kWh | £23.17 | £2,317 |
These are illustrative electricity-only calculations, rounded to the nearest penny or pound. They exclude charging losses, standing charges, parking fees, subscriptions and other costs.
Ofgem published an average electricity unit rate of 26.32p/kWh for October–December 2026 for households on standard variable tariffs paying by Direct Debit in Great Britain.
That reference rate is not a forecast for 2027 and may differ from individual household tariffs.
The 10p, 55p and 80p examples are hypothetical rates, not verified current market averages or quotations.
Home Charging and Public Charging
Home charging can provide access to lower electricity rates, particularly where suitable off-peak tariffs are available.
Public charging prices depend on the network, location, charging speed and payment arrangements.
The overall cost of an electric vehicle therefore depends partly on the proportion of charging carried out at home, at work and at public charging locations.
View Electric Car Leasing Offers
3. What Is the Planned Electric Vehicle Mileage Tax?
The UK government plans to introduce Electric Vehicle Excise Duty (eVED) from 1 April 2028.
The measure was announced in Budget 2025, with further policy details published during 2026.
The announced initial rates are:
| Vehicle type | Proposed rate |
|---|---|
| Battery-electric cars | 3p per mile |
| Hydrogen fuel-cell cars | 3p per mile |
| Plug-in hybrid cars | 1.5p per mile |
The proposed charge would operate alongside existing Vehicle Excise Duty.
Illustrative Annual eVED Charges
| Annual mileage | Fully electric car | Plug-in hybrid car |
|---|---|---|
| 5,000 | £150 | £75 |
| 8,000 | £240 | £120 |
| 10,000 | £300 | £150 |
| 12,000 | £360 | £180 |
| 15,000 | £450 | £225 |
These figures use the announced initial rates and assume a full year of mileage. Actual liability will depend on the legislation and implementation arrangements.
The government intends to increase the mileage rates in line with inflation from 2029/30.
How Could eVED Affect a Lease Beginning in 2027?
A 36- or 48-month lease beginning in 2027 would normally extend beyond April 2028.
The planned charge could therefore become relevant while the agreement is still in force.
The government has indicated that special administrative arrangements are being developed for leasing and rental businesses.
How the charge will be administered and reflected in individual lease agreements will depend on the final arrangements and contractual terms.
Official information: HMRC – Electric Vehicle Excise Duty
Further information is available in the Autumn Budget 2026 guide.
4. Is an Electric Car Cheaper to Run Than a Petrol Car?
Electric vehicles may have lower energy costs than petrol vehicles, but the result depends on efficiency and energy prices.
The following example compares energy and fuel costs only.
Illustrative Annual Running-Cost Comparison
Assumptions:
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Both vehicles travel 10,000 miles annually.
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The electric car consumes 18kWh per 100km.
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Electricity costs 26.32p/kWh.
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The petrol car achieves 45mpg using UK imperial gallons.
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Petrol costs a hypothetical £1.45 per litre.
| Cost | Electric car | Petrol car |
|---|---|---|
| Annual mileage | 10,000 | 10,000 |
| Efficiency | 18kWh/100km | 45mpg (UK) |
| Energy/fuel price | 26.32p/kWh | £1.45/litre |
| Annual energy/fuel cost | £762 | £1,465 |
| Approximate cost per mile | 7.6p | 14.6p |
In this hypothetical example, the electric vehicle has approximately £702 lower annual energy costs.
However, charging the same electric car entirely at a hypothetical 80p/kWh public charging rate would increase its annual electricity cost to approximately £2,317.
This illustrates how charging arrangements can change the comparison.
Costs Not Included
The example excludes:
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Vehicle leasing rentals.
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Initial rental and administration fees.
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Insurance.
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Servicing and maintenance.
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Tyres.
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Vehicle taxation.
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Charging losses.
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Potential contractual charges.
It is not a comparison of the total ownership or leasing costs of two specific vehicles.
5. Electric Company Car Tax in 2027
Electric company cars can benefit from comparatively low Benefit-in-Kind tax percentages.
BiK tax may arise where a company car is available for an employee's private use.
Zero-Emission Company Car BiK Rates
| Tax year | BiK percentage |
|---|---|
| 2026/27 | 4% |
| 2027/28 | 5% |
| 2028/29 | 7% |
| 2029/30 | 9% |
| 2030/31 | 10% |
The 2030/31 increase is a government-announced measure proposed for legislation.
Illustrative £40,000 Company Car Example
Assume a fully electric company car has a taxable list price of £40,000 and is available for private use throughout 2027/28.
At a 5% BiK rate, the taxable benefit would be:
£40,000 × 5% = £2,000
| Illustrative employee income tax rate | Annual tax | Monthly equivalent |
|---|---|---|
| 20% | £400 | £33.33 |
| 40% | £800 | £66.67 |
This simplified calculation assumes the stated taxable vehicle value and income tax rate. Actual liabilities depend on individual circumstances and applicable rules.
Employer National Insurance and other relevant obligations may also apply.
BiK is calculated using the vehicle's taxable list price and applicable percentage, rather than its monthly leasing rental.
Business Contract Hire may also have VAT and tax implications, depending on the business, vehicle use and agreement.
Explore Business Contract Hire
6. Advantages of Electric Car Leasing
Fixed Contractual Rentals
Contract hire normally provides an agreed payment structure for the contract term.
Additional costs and contractual charges may still apply.
No Need to Sell the Vehicle
Under standard contract hire, the vehicle is normally returned to the finance provider at the end of the agreement.
The customer does not usually have to arrange the vehicle's resale.
Access to Different Vehicles
At the end of an agreement, customers may enter a new agreement for another vehicle, subject to availability and eligibility.
Different Contract Options
Depending on the vehicle and finance provider, various contract lengths, mileage allowances and initial rental profiles may be available.
7. Disadvantages and Limitations of Electric Car Leasing
Public Charging Costs
Frequent rapid charging can increase electricity costs considerably.
Driving Range
Actual driving range varies according to temperature, speed, driving style, terrain and vehicle load.
Mileage Allowances
Exceeding the contractual mileage allowance may result in excess mileage charges.
Return Conditions
Charges may apply for vehicle damage or condition outside the relevant fair wear and tear standards.
Early Termination
Ending an agreement before its scheduled end date can involve substantial charges.
No Automatic Ownership
Standard contract hire normally requires the vehicle to be returned.
Tax Changes
Future changes in vehicle taxation may affect costs during the agreement.
8. Types of Electric Cars Available to Lease
Electric vehicles are available across several categories.
| Vehicle category | Typical characteristics |
|---|---|
| Compact electric hatchback | Smaller dimensions and urban practicality |
| Electric family SUV | Passenger and luggage space |
| Electric executive saloon | Comfort and motorway suitability |
| Long-range electric vehicle | Larger driving-range capability |
| Electric company car | Business use and applicable BiK treatment |
Vehicles differ in battery capacity, efficiency, charging capability, range, specification, insurance group and leasing costs.
Browse Electric Car Leasing Offers
9. Factors That Affect Electric Leasing Suitability
The suitability and total cost of an electric car lease depend on several circumstances.
These include:
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Availability and cost of home, workplace or public charging.
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Annual mileage and typical journey lengths.
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Vehicle size and passenger requirements.
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Insurance costs.
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Monthly and initial rental amounts.
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Contract length.
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Maintenance requirements.
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Vehicle taxation.
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Whether vehicle ownership is required.
Different vehicles and finance arrangements may produce different outcomes.
10. Frequently Asked Questions
Is electric car leasing still worth it in 2027?
Electric leasing may offer competitive running costs and access to newer vehicles. Overall value depends on charging arrangements, vehicle costs and contractual terms.
Will electric cars face mileage tax in 2028?
The government plans to introduce eVED from 1 April 2028. The announced initial rate for fully electric cars is 3p per mile.
Is home charging cheaper than public charging?
Home charging can be cheaper than public rapid charging, although actual prices vary by tariff and provider.
What is the electric company car BiK rate for 2027/28?
The zero-emission company car BiK percentage is 5%.
Can an electric car be leased without a home charger?
Yes. Public and workplace charging may provide alternatives, subject to availability.
Does the customer own the car at the end of a contract hire agreement?
No. Under standard contract hire, the vehicle is normally returned to the finance provider.
Are electric vehicles maintenance-free?
No. Electric vehicles still require servicing and maintenance, including tyres, brakes and other components.
Can an electric car lease be ended early?
Early termination may be possible, but the finance provider's terms and charges will apply.
Is a longer lease always cheaper?
No. Contract costs depend on the rental profile, vehicle, mileage and other terms. A longer contract also extends the period of commitment.
11. Summary: Electric Car Leasing in 2027
Electric car leasing remains an available option for UK motorists and businesses in 2027.
Potential benefits include lower energy costs in certain charging circumstances, access to newer vehicles and comparatively low electric company car BiK percentages.
Potential limitations include public charging costs, contractual restrictions, insurance, maintenance and future vehicle taxation.
The overall financial outcome depends on the specific vehicle, lease agreement, charging arrangements and individual circumstances.
12. Electric Car Leasing with Applied Leasing
Applied Leasing is a family-run UK vehicle leasing broker established in 1990.
The company provides access to vehicle leasing options for personal and business customers, including electric vehicles.
Explore Available Options
View current electric vehicle leasing offers or contact Applied Leasing for information about available vehicles and contract terms.
Regulatory Information
Applied Leasing Limited is a credit broker, not a lender. Applied Leasing Limited is an Appointed Representative of Jurni Limited, which is authorised and regulated by the Financial Conduct Authority for credit broking activities.
Finance is subject to status, eligibility, availability and the relevant terms and conditions.
The nature of Applied Leasing's lender relationships, services, remuneration and any applicable fees should be disclosed in accordance with the relevant regulatory requirements and customer documentation.
Official Sources
Information reviewed on 5 November 2026. This article is for general information only and does not constitute personalised financial, legal or tax advice. Calculations are illustrative. Actual leasing costs, energy prices, taxation and contractual terms may differ. Future government measures remain subject to the relevant legislation and implementation arrangements.