Calculate the Benefit in Kind tax on your company car based on CO2 emissions and list price.
This calculator provides estimates based on 2026-27 HMRC BIK tables. Diesel surcharge applies to non-RDE2 compliant vehicles. Always verify with HMRC or a qualified tax adviser.
Company car tax, also known as Benefit in Kind (BIK) tax, is the income tax you pay on the benefit of having a company car available for personal use. It is one of the most common and significant taxable benefits reported on the P11D form. The amount you pay depends on the car's list price, its CO2 emissions, the fuel type, and your marginal income tax rate. Understanding your company car tax liability is essential for making the right choice between taking a company car or opting for a cash allowance. The UK government uses company car tax as a policy lever to encourage the adoption of low-emission vehicles. The BIK percentage for fully electric cars is just 2% for 2026-27, making them significantly cheaper to run as company cars than petrol or diesel alternatives. A GBP 40,000 electric car costs a basic-rate taxpayer just GBP 160 per year in BIK tax, compared to over GBP 2,000 for a typical petrol car with the same list price. In addition to the car itself, if your employer pays for private fuel, you may also be liable for fuel benefit tax. This is calculated using a fixed multiplier (GBP 27,800 for 2026-27) scaled by your car's BIK percentage. The fuel benefit can add a substantial amount to your tax bill, so many employees choose to pay for private fuel themselves and only use the company fuel card for business mileage.
Follow these steps to calculate your company car tax: 1. Enter the car's list price. This is the P11D value, which includes the manufacturer's list price plus any optional extras and delivery charges, but excludes the first year's road tax and registration fee. You can find this on your company car scheme documentation or ask your fleet manager. 2. Enter the car's CO2 emissions in grams per kilometre (g/km). This figure is on the V5C log book, the car's specification sheet, or the DVLA website. It is the key factor determining your BIK percentage. 3. Select the fuel type. Choose from petrol, diesel (non-RDE2), electric, hybrid petrol, or hybrid diesel. Diesel cars that do not meet the Real Driving Emissions 2 (RDE2) standard attract a 4% surcharge. 4. If you have a hybrid or electric vehicle, expand the advanced options and enter the electric-only driving range in miles. This affects the BIK percentage for hybrid vehicles. 5. Select your income tax band to calculate the actual tax you will pay. Higher-rate taxpayers pay twice as much company car tax as basic-rate taxpayers on the same car. 6. Optionally, enter any personal contribution you make towards the cost of the car. This reduces the P11D value used for the calculation. 7. Review the results showing your BIK percentage, annual and monthly tax, fuel benefit tax (if applicable), and total annual tax.
Company car tax is calculated in two stages. First, the BIK percentage is determined based on the car's CO2 emissions and fuel type. Then this percentage is applied to the car's list price to give the BIK value, which is taxed at your marginal income tax rate. For electric vehicles with zero emissions, the BIK rate is 2%. For hybrid vehicles with CO2 emissions of 50g/km or less, the rate depends on the electric-only range: 130+ miles gives 2%, 70-129 miles gives 5%, 40-69 miles gives 8%, 30-39 miles gives 12%, and under 30 miles gives 14%. For petrol cars, the rate starts at 15% for emissions of 1-50g/km. Above 50g/km, the percentage increases by 1% for each additional 5g/km bracket (e.g. 51-54g/km is 16%, 55-59g/km is 17%), up to a maximum of 37% at 170g/km and above. Diesel cars that do not meet the RDE2 emissions standard pay a 4% surcharge on top of the petrol rate, but the overall BIK percentage is still capped at 37%. The fuel benefit charge is a separate calculation: the GBP 27,800 multiplier is multiplied by the car's BIK percentage to give the fuel benefit value. Tax is then charged on this value at your marginal rate. Electric vehicles are exempt from the fuel benefit charge. If you make a personal capital contribution towards the car, this is deducted from the list price before calculating the BIK value. The maximum deduction is GBP 5,000.
When choosing between a company car and a cash allowance, consider the total cost of ownership. For low-emission vehicles (especially electric), the company car is often significantly cheaper due to the low BIK rates, plus you may benefit from free workplace charging. For higher-emission vehicles, a cash allowance might be more cost-effective. The BIK percentage tables are set by HMRC and published in advance. Rates for electric vehicles have been confirmed at 2% for 2026-27, rising to 3% in 2027-28 and 4% in 2028-29. Planning ahead can help you choose the most tax-efficient vehicle for the duration of your lease. If you have a company car but do not receive free fuel for private use, you do not pay the fuel benefit charge. You should keep records of business and private mileage and reimburse your employer for any private fuel used, or arrange for separate fuel cards. Company car tax applies to any car made available for private use, even if you rarely use it privately. The only exception is pool cars, which must be available for use by multiple employees and not normally kept at any employee's home overnight.