Electric Car Lease vs Petrol Car Lease: Which Is Cheaper?

The Short Answer

It comes down to two questions, and everything else is detail.

Can you charge at home? And are you leasing through a business?

If the answer to both is yes, an electric lease wins comfortably, and the margin is not close. The company car tax on an electric car is currently a sixth to an eighth of the tax on an equivalent petrol one, and charging overnight at home costs roughly a tenth of what petrol costs per mile.

If you cannot charge at home and you are leasing privately, the honest answer is that petrol may well be cheaper, and we set out the arithmetic below rather than glossing over it. Roughly a third of UK households have no driveway or dedicated parking, so this is not an edge case.

Company Car Tax: The Biggest Single Difference

If you are leasing through a business and the car is available for private use, benefit in kind is the figure that decides it. It is charged as a percentage of the car's list price, and that percentage is set by CO2 emissions.

In the current tax year that is roughly a sixth to an eighth of the taxable benefit. The electric rate is scheduled to climb, by one percentage point a year to 2027/28 and then two points a year to 2029/30, so the gap narrows. But even in 2029/30, 9 per cent against 28 to 34 per cent is still about a third or less, so this is a long lived advantage rather than a loophole about to close. The cars this most often comes up on are the BMW i4, the Tesla Model 3 and the Kia EV6, all of which sit in the electric band.

Two details that catch people out. A diesel carries a four percentage point supplement unless it meets the RDE2 standard, so diesel is the worst of the three for this. And the percentages are capped, at 37 per cent now, rising to 38 and then 39, which means a very high emission car is not taxed proportionally worse beyond that point. Rates change on 6 April, not in January, so the tax year boundary is the date to plan around. Your accountant should confirm your own position, because these are the headline rates rather than your personal calculation. Our business leasing pages go into how the rest of it works.

Electricity or Petrol: Which Is Actually Cheaper Per Mile?

Here is the part most comparisons get wrong, because they quote the best case and stop. We want to be honest with you about the full picture, since it contains a genuine reversal.

These figures assume a petrol car returning 45mpg and an electric car managing 3.5 miles per kWh, which are fair real world numbers for a family car.

So the eleven to one advantage everyone quotes is real, and it only exists on a home charger on an overnight tariff. Run the same car on public ultra rapid chargers and it costs more per mile than petrol. Across the ten largest UK networks, rapid charging ranged from 59p to 92p per kWh in September 2026, and there is a tax reason for part of that: public charging carries 20 per cent VAT where domestic electricity carries 5 per cent. If anything the table flatters the electric car, because at motorway speeds you will see fewer than 3.5 miles per kWh, not more.

This is why we ask where you park before we recommend anything. Roughly a third of UK households, about nine million of them, have no driveway or dedicated parking near home. If you are one of them, an electric car can still make sense for other reasons, but do not budget for the eleven to one figure, because you will not get it.

Road Tax, and the Per Mile Charge Coming in 2028

Electric cars no longer avoid road tax. Since April 2025 a new electric car pays a nominal rate in its first year and then the full standard rate from year two onwards, which is the same standard rate a petrol car pays. So after the first year, vehicle excise duty is effectively neutral between the two. The Expensive Car Supplement also applies to electric cars registered since April 2025 if the list price is above the threshold, payable for five years from the second licence, and that catches a lot of electric cars because they tend to list higher than petrol equivalents.

The bigger change is ahead, and almost no comparison mentions it yet. From 1 April 2028 a per mile charge applies to electric cars, confirmed by the government rather than rumoured: 3p per mile for battery electric and hydrogen cars and 1.5p per mile for plug in hybrids, on top of vehicle excise duty, rising with inflation from 2029/30 and collected through declared odometer readings.

Put that next to the table above and it matters. 3p per mile on top of 1.6p of electricity nearly triples the running cost of home charging, taking it from about a tenth of petrol's cost to about a quarter. Still much cheaper, but a very different number from the one being quoted today. If you are signing a four year contract now, part of it will fall after that date, so it is worth knowing. Petrol pays fuel duty instead, currently 52.95p per litre, and the Budget on 28 October 2026 extended the freeze on that rate to July 2027, deferring the 3p per litre rise that had been sitting in legislation for 1 January 2027.

Why Residual Values Matter More on a Lease Than a Purchase

A lease rental is not a payment towards owning the car. It is built from the car's list price minus its forecast value at the end of the term, plus funding cost and margin, spread across the months. You are renting the depreciation.

That has a consequence worth understanding. A small change in what a funder expects the car to be worth in three years moves your monthly figure by much more than it sounds, because that forecast is spread over a short period rather than the whole value of the car. It also means that when the forecast turns out to be wrong, the funder absorbs it and you do not. On a car whose future value is genuinely uncertain, that risk transfer is the strongest honest argument for leasing rather than buying.

Where are electric values now? Better than the headlines of two years ago. In September 2026, used electric cars were up 2.8 per cent year on year, the only fuel type showing price growth, against petrol down 1 per cent and diesel down 0.8 per cent, with used electric demand up 40 per cent. The industry is not unanimously optimistic though, and we would rather give you both sides: forecasters expect the electric advantage to narrow through the end of 2026, and in the BVRLA's 2026 outlook 64 per cent of rental and leasing companies expected electric residual value decline to continue. Our guide on the residual value of electric cars in leasing goes into this properly.

Servicing, Tyres and Insurance

Servicing is less clear cut than you will read elsewhere. One analysis across more than 600 UK models put electric cars about 30 per cent cheaper to service over five years. But fleet data from a different source found an electric family hatchback needed about 14 per cent more service visits and cost about 5 per cent more in workshop time over three years, while an electric large SUV was about 35 per cent cheaper. Electric cars did spend 24 to 31 per cent fewer days off the road, which matters if the car earns its living. The honest summary is that it depends on the car rather than the fuel.

Tyres are the clear loss. Electric cars are heavier and deliver torque instantly, and fleet data shows their first tyre change coming at about 17,985 miles against about 24,335 miles for petrol and diesel, so roughly 26 per cent fewer miles per set. The tyres are also bigger, averaging about 7 per cent larger in diameter, and cost about 59 per cent more to replace. On a high mileage contract that adds up, and it is also a condition risk at the end of a lease, so it is worth budgeting for. Brakes go the other way, lasting longer because regenerative braking does much of the work, though we have not found a credible UK figure to put on that so we are not going to invent one.

Insurance is contested and moving. On 2026 comparison data an electric car costs roughly a tenth to a seventh more to insure, which is a big improvement on the roughly third more being reported in 2023, and on some small electric cars the gap has closed entirely or reversed. One 2024 analysis found electric cars about 5 per cent cheaper, which cuts against that. The insurance industry's own body publishes no split by fuel type, so anyone quoting a single confident figure is extrapolating. Get a quote on your own postcode and history before you commit rather than relying on any average, including ours.

When a Petrol Lease Is the Better Choice

We arrange both, so we have no reason to push you either way. These are the situations where we would say take the petrol car.

• You have no off street parking. Without a home charger the running cost advantage collapses to roughly parity at best, and worse on most public networks. This is the big one.
• You cover high motorway mileage and would charge publicly. On most ultra rapid networks that is more expensive per mile than petrol, before you count the time standing at a charger.
• You tow. A test of eight electric cars pulling a caravan at 85 per cent of their kerb weight recorded an average range drop of 54.6 per cent, with the worst losing over 60 per cent. Halving your range while towing changes the journey entirely.
• You are leasing privately rather than through a business. The benefit in kind advantage is the single largest saving and a private lease gets none of it.
• You cover very high mileage on a fixed contract. The tyre cost difference compounds, and so does the per mile charge arriving in 2028.

If one or more of those describes you, say so when you call and we will cost both properly rather than assuming electric is the answer. The Volkswagen Golf and the Skoda Octavia are the two petrol cars we are asked to price against an electric equivalent most often. The full range of cars is available either way, and the electric leasing pages set out what is available if you do decide to switch.

Why Salary Sacrifice Schemes Are Almost Always Electric

If your employer offers a car through salary sacrifice, you will almost certainly find only electric cars on the list. That is not a preference, it is how the rules work, and the mechanism is worth understanding.

For most cars, the optional remuneration arrangement rules tax the employee on whichever is higher: the benefit in kind on the car, or the salary they gave up to get it. Because the salary given up is usually the larger figure, that comparison wipes out the saving and the arrangement stops being worth doing.

Cars emitting 75g/km or less are excluded from that comparison. For those, the employee is taxed only on the benefit in kind, while the sacrificed salary escapes income tax and both employee and employer National Insurance. With the electric rate at 4 per cent in the current tax year, the taxable amount is small against the salary given up, and that gap is the whole saving. Take your own figures from your employer's scheme provider or your accountant, and our salary sacrifice guide covers how the arrangements are usually structured.

So Which Should You Lease?

Work through it in this order and you will have your answer in two minutes.

• Can you charge at home overnight? If no, the running cost case for electric largely disappears and petrol deserves a serious look.
• Is it a company car available for private use? If yes, the benefit in kind gap is so large that it usually settles the question on its own.
• Do you tow, or do long motorway runs without a home charger? If yes, petrol.
• Everything else is a smaller factor, and servicing, tyres and insurance roughly cancel out across a typical contract.

Because we are an independent broker placing agreements across several funders, we can quote the same car both ways and show you where each actually lands rather than where the headline figures suggest. Tell us your annual mileage, whether you can charge at home, and whether it is a business or personal lease, and we will do the comparison properly.