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    Company Car Tax Calculator

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    Enter your company car details to calculate BIK tax

    Understanding Company Car Tax (BIK)

    Company car tax, officially known as Benefit in Kind (BIK) tax, is charged on the personal use of a company-provided vehicle. Our company car tax calculator helps employees understand exactly how much additional income tax they'll pay based on their car's characteristics, making it easier to choose tax-efficient vehicles and budget for the additional cost.

    The BIK rate is determined primarily by the car's CO2 emissions, fuel type, and P11D value (the official list price). Electric vehicles benefit from very low BIK rates of just 2% for 2026/27, making them extremely tax-efficient compared to traditional petrol and diesel vehicles that can face rates up to 37%.

    Understanding company car tax is crucial when choosing between different vehicle options or deciding whether to take a company car or cash allowance. Our BIK calculator shows the annual and monthly tax implications, helping you make informed decisions about your company car benefit.

    Company Car Tax Examples 2026/27

    Electric Car (2% BIK)

    Car List Price:£40,000
    BIK Rate:2%
    Annual BIK Value:£800
    Tax Rate (20%):20%
    Annual Tax:£160
    Monthly Tax:£13

    Plugin Hybrid (5% BIK)

    Car List Price:£40,000
    Electric Range:80 miles
    BIK Rate:5%
    Annual BIK Value:£2,000
    Tax Rate (40%):40%
    Annual Tax:£800
    Monthly Tax:£67

    Petrol Car (25% BIK)

    Car List Price:£40,000
    CO2 Emissions:120g/km
    BIK Rate:25%
    Annual BIK Value:£10,000
    Tax Rate (40%):40%
    Annual Tax:£4,000
    Monthly Tax:£333

    Company Car BIK Rates 2026/27

    Electric & Low Emission

    • Pure Electric (0g/km CO2):2%
    • Plugin Hybrid (130+ mile range):2%
    • Plugin Hybrid (70-129 miles):5%
    • Plugin Hybrid (40-69 miles):8%
    • Plugin Hybrid (30-39 miles):12%

    Petrol & Diesel

    • 1-50g/km CO2:2-12%
    • 51-75g/km CO2:13-17%
    • 76-100g/km CO2:18-22%
    • 101-130g/km CO2:23-28%
    • 131g/km+ CO2:29-37%

    Company Car Tax Rules 2026/27

    Key Points

    • BIK rates based on CO2 emissions and fuel type
    • Electric vehicles: 2% rate (very tax efficient)
    • Diesel surcharge: +4% (unless RDE2 compliant)
    • Maximum BIK rate: 37% for high-emission vehicles

    Personal Contribution

    • Maximum reduction: £5,000 per year
    • Reduces P11D value for BIK calculation
    • Must be actual cash contribution
    • Cannot reduce BIK rate below 2%

    Frequently Asked Questions

    How is company car tax (BIK) calculated?+
    Company car tax (Benefit in Kind) is calculated using the car's P11D value (list price including options), CO2 emissions, fuel type, and your personal tax rate. The CO2 emissions determine a percentage rate applied to the P11D value to calculate your annual BIK value, which is then taxed at your marginal income tax rate.
    What are the company car tax rates for 2026/27?+
    Company car tax rates for 2026/27 range from 2% for pure electric vehicles to up to 37% for high-emission petrol and diesel cars. The rates are based on CO2 emissions: 0g/km (electric) = 2%, 1-50g/km (plugin hybrid with 130+ miles range) = 2%, increasing by 1% for every 5g/km of CO2 emissions.
    Are electric company cars tax efficient?+
    Yes, electric company cars are very tax efficient with only a 2% BIK rate for 2026/27. This means a £40,000 electric car would have an annual BIK value of £800, resulting in just £160 tax per year for a basic rate taxpayer, compared to over £2,000 for an equivalent petrol car.
    What is the P11D value of a company car?+
    The P11D value is the official list price of the car when new, including VAT and all factory-fitted options and accessories. It doesn't include the first year registration fee or road fund licence. This value is used as the basis for calculating your company car tax liability.
    Can I reduce my company car tax liability?+
    Yes, you can reduce company car tax by: choosing a lower emission vehicle, opting for an electric or low-emission hybrid car, making a personal contribution towards the car (up to £5,000 per year reduces the P11D value), or considering a cash allowance instead of a company car.
    What is the diesel surcharge for company cars?+
    Diesel company cars face a 4% surcharge on their BIK rate (capped at 37% maximum) unless they meet RDE2 (Real Driving Emissions) standards. Most new diesel cars from 2019 onwards meet RDE2 and avoid this surcharge, but older diesel vehicles pay the additional 4%.
    How does plugin hybrid company car tax work?+
    Plugin hybrid company cars have BIK rates based on their CO2 emissions and electric-only range. Cars with over 130 miles electric range can qualify for rates as low as 2%. The rate increases based on the electric range: 130+ miles = 2%, 70-129 miles = 5%, 40-69 miles = 8%, 30-39 miles = 12%.
    When do I pay company car tax?+
    Company car tax is usually deducted from your salary through PAYE each month. If you're a higher rate taxpayer, you may need to complete a Self Assessment to pay any additional tax due. The tax is calculated annually but spread over your 12 monthly payslips.

    Related Tax Calculators

    Company car tax is a payroll benefit, so it connects to income tax, NI and wider employment costs. use the income tax calculator for take-home pay after benefits, use the employer NI calculator for payroll cost context and use the IR35 calculator for contractor versus employee comparisons.

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