Company Car Tax Calculator 2026/27

Calculate your Benefit in Kind (BIK) tax liability — personal income tax and employer NI.

Enter Car Details

Your Annual Company Car Tax
£0
0%
BIK Rate
£0
BIK Value
£0
Per Month
£0
Employer Class 1A NI

Frequently Asked Questions

How is company car tax calculated? ▼
Your annual company car tax = P11D value × BIK% × your income tax rate. The BIK% comes from HMRC's CO2 table. Example: £30,000 car, 120g/km (31% BIK), 40% taxpayer: £30,000 × 31% × 40% = £3,720/year.
What is the BIK rate for electric cars in 2026/27? ▼
Pure electric cars attract a BIK rate of 4% in 2026/27. This rises to 5% in 2027/28 and 6% in 2028/29. On a £40,000 EV, a 40% taxpayer pays just £640/year in company car tax — making EVs extremely tax-efficient as company vehicles.
What is the diesel supplement? ▼
Diesel cars not meeting the RDE2 real-world emissions standard pay a 4% surcharge on top of the standard BIK %, up to a max of 37%. Most diesels registered from January 2021 are RDE2-compliant — check your car's documentation or ask your fleet manager.
Is a company car worth it vs a car allowance? ▼
A car allowance is paid as salary — fully taxed at your income tax rate plus NI. A company car is taxed at BIK rates (as low as 4% for EVs). For electric cars, the company car route wins easily. For a high-emission petrol car, a cash allowance plus HMRC mileage claims often works out cheaper.
What is employer Class 1A NI on company cars? ▼
Employers pay Class 1A NI at 13.8% on the BIK value of company cars (and other benefits). So on a £9,000 BIK value, the employer pays £1,242 in Class 1A NI. This is a cost to the business, not the employee.

How UK company car tax (BiK) works in 2026/27

UK company car tax — known as Benefit in Kind (BiK) — is calculated as a percentage of the car's "P11D value" (typically the manufacturer's list price plus delivery and accessories) based on the car's CO2 emissions and fuel type. For 2026/27, the BiK percentage tables range from 3% for pure electric vehicles to 37% for the highest-emitting petrol or diesel cars.

The resulting taxable benefit is added to your salary and taxed at your marginal income tax rate. So a £35,000 P11D-value petrol car with 24% BiK creates an £8,400 taxable benefit; a basic-rate taxpayer would owe £1,680/year in tax (20%), a higher-rate taxpayer £3,360/year (40%). For the same car, an electric equivalent at 3% BiK would create only a £1,050 taxable benefit — annual tax of £210 (basic) or £420 (higher).

The 3% BiK rate on pure electric vehicles makes EVs disproportionately attractive as company cars — the tax saving versus a comparable ICE vehicle can be £2,000-£4,000/year for a higher-rate taxpayer. This is why salary sacrifice schemes for EVs are now widely offered: you sacrifice gross salary to lease an EV via your employer, paying the 3% BiK rate plus the sacrificed salary's marginal-rate saving. For a £60k earner choosing a £450/month EV lease, the net cost can be as low as £270/month after salary sacrifice tax savings.

Fuel benefit (where the employer pays for personal fuel) is a separate BiK based on a fixed multiplier (£28,200 for 2026/27) multiplied by the same emission band percentage. A 24% BiK car with employer-paid fuel adds £6,768 to the taxable benefit, costing £1,353/year tax for a basic-rate taxpayer or £2,707 for higher-rate. For most drivers, declining the fuel benefit and paying for fuel personally produces a better outcome unless personal mileage is very high.

When company car tax favours electric vehicles

The decision between taking a company car and opting out for a cash allowance has shifted decisively toward electric vehicles since 2020. With pure EV BiK at 3% (rising to 5% by 2028 in the published schedule), the company-car route now beats taking cash for most higher-rate taxpayers when the chosen vehicle is electric. For ICE vehicles at 24-37% BiK, cash allowances often produce better net outcomes — the BiK tax bill exceeds the value of using the car.

Salary sacrifice for an EV (renting via your employer through a pre-tax salary deduction) typically delivers the lowest net cost: the gross lease cost is offset by both income tax and NI savings, with only the 3% BiK liability remaining. For a £450/month lease, a higher-rate taxpayer might pay just £230/month net after savings. Compare this to taking the same £450 from take-home pay (after 42p marginal deduction) — equivalent to £776 of gross salary needed to fund the same lease. The annual difference can be £4,000-£6,000 in net cost.