Company Car Tax (Benefit-in-Kind) Calculator
Estimate your annual company car tax based on P11D value, CO2 emissions, and your income tax band.
How does the company car tax calculator work?
Company car tax — technically "Benefit-in-Kind" (BIK) tax — is based on a percentage of your car's P11D value (broadly, its list price including VAT and factory options, but excluding the first registration fee and road tax). That percentage depends on the car's CO2 emissions and fuel type, and rises each tax year for electric and low-emission hybrids on a schedule already announced by HMRC through 2027/28. The resulting figure is your "taxable benefit," and you pay income tax on that amount at your normal rate.
3 worked examples
Example 1 — Fully electric car, higher-rate taxpayer
A £40,000 electric company car, 2026/27 tax year, higher-rate taxpayer.
4%
Taxable BIK value:£40,000 × 4% = £1,600
Annual tax owed (40%):£1,600 × 40% = £640/year (about £53/month) — dramatically less than an equivalent petrol car
Example 2 — Mid-range petrol car, basic-rate taxpayer
A £28,000 petrol car emitting 120g/km CO2, 2026/27 tax year, basic-rate taxpayer.
29%
Taxable BIK value:£28,000 × 29% = £8,120
Annual tax owed (20%):£8,120 × 20% = £1,624/year (about £135/month)
Example 3 — Plug-in hybrid with a specific electric range
A £35,000 plug-in hybrid emitting 45g/km CO2 with a 35-mile electric-only range, 2026/27 tax year, higher-rate taxpayer.
CO2 is 1–50g/km, so the percentage depends on electric range. 35 miles falls in the "30–39 miles" band.
BIK percentage (30–39 mile band, 2026/27):14%
Taxable BIK value:£35,000 × 14% = £4,900
Annual tax owed (40%):£4,900 × 40% = £1,960/year
Example 3 shows why the electric range matters so much for plug-in hybrids — the same car with a 25-mile range instead of 35 would jump to the "under 30 miles" band at a notably higher percentage, even with identical CO2.
BIK percentage bands, 2025–2028
Electric and low-CO2 hybrid rates rise by 1 percentage point each tax year through 2027/28, a schedule HMRC published in advance for business planning certainty. Standard petrol/diesel bands from 51g/km upward have been frozen since 2020/21.
| CO2 / electric range | 2025/26 | 2026/27 | 2027/28 |
|---|---|---|---|
| 0g/km (electric) | 3% | 4% | 5% |
| 1–50g/km, range ≥130 miles | 3% | 4% | 5% |
| 1–50g/km, range 70–129 miles | 6% | 7% | 8% |
| 1–50g/km, range 40–69 miles | 9% | 10% | 11% |
| 1–50g/km, range 30–39 miles | 13% | 14% | 15% |
| 1–50g/km, range under 30 miles | 15% | 16% | 17% |
| 51–54g/km | 15% (unchanged across all three years) | ||
| 90–94g/km | 23% (unchanged across all three years) | ||
| 160g/km and above | 37% maximum (unchanged, and the overall cap) | ||
For the full breakdown of every 5g/km band from 51g/km to the 37% cap, the calculator above applies the complete official table automatically.
The diesel supplement
Diesel cars that don't meet the RDE2 (Real Driving Emissions Step 2) standard pay an additional 4 percentage points on top of their standard CO2-based rate, capped at the overall 37% maximum. Most diesel cars first registered from around 2019–2020 onward meet RDE2 and avoid this supplement — but many older diesel company cars still on the road do not. Check your car's specific certification if you're unsure; it's shown on the manufacturer's emissions documentation, not something you can tell from CO2 figures alone.
What it costs your employer
Separately from your own income tax, your employer pays Class 1A National Insurance Contributions on the same taxable BIK value, at the current rate of 15%. This doesn't affect what you owe personally, but it's part of why company car tax bands matter to employers' fleet decisions too — a low-BIK electric car is cheaper for the business as well as the employee.
What this calculator can't tell you
Your exact P11D value
P11D value isn't simply the price you'd pay privately — it includes VAT and most factory-fitted options, but excludes the first registration fee and VED. Your employer or leasing company should confirm the exact P11D value used for your specific car.
Part-year ownership adjustments
If you only had the company car for part of the tax year, your actual BIK charge is pro-rated for the number of days you had it — this calculator shows the full annual figure only.
Interaction with other benefits or salary sacrifice
If you're in a salary sacrifice scheme, or have other taxable benefits that push you across a tax band boundary, your real liability calculation is more complex than a single flat rate applied to this one benefit.
Fuel benefit, if applicable
If your employer also pays for private fuel, that's a separate taxable benefit (car fuel benefit) with its own calculation, not included here.
Common mistakes
Confusing P11D value with the car's actual purchase price
P11D value is a specific defined figure (list price plus VAT and options, minus registration fee and VED), not simply what your employer paid, especially for a used or fleet-discounted car.
Forgetting the diesel supplement
A non-RDE2 diesel car's BIK percentage is 4 points higher than the CO2 figure alone would suggest — easy to miss if you're comparing cars using only their headline CO2 number.
Guessing the electric range for a plug-in hybrid
The percentage band for 1–50g/km hybrids depends entirely on the exact electric-only range, and the band boundaries (30, 40, 70, 130 miles) are precise — a rough guess can put you in the wrong band. Check the manufacturer's official WLTP electric range figure.
Assuming next year's rate will be the same
Electric and low-CO2 hybrid rates are scheduled to keep rising through at least 2027/28. If you're planning a multi-year company car choice, factor in the rate for each year you'll have the car, not just the first.
Reducing your company car tax
- Choose a fully electric or low-CO2 hybrid — the percentage difference between an EV and a typical petrol car is enormous, as Examples 1 and 2 above show
- For plug-in hybrids, prioritise electric range — the jump from "under 30 miles" to "70+ miles" range meaningfully lowers your BIK band
- Check RDE2 compliance before choosing a diesel — avoiding the 4-point supplement is a straightforward saving if you need diesel for other reasons
- Compare a company car against a cash allowance — depending on your mileage and tax position, taking a cash allowance and running your own car (potentially claiming HMRC mileage rates) can sometimes work out better; see our HMRC Business Mileage Calculator
How we calculate
BIK percentage is looked up from the official HMRC bands: electric/hybrid rows (0–50g/km) depend on the tax year and, for 1–50g/km hybrids, the electric-only range band; standard rows (51g/km+) use a fixed table unchanged since 2020/21, in 5g/km increments from 15% up to the 37% cap.
Diesel supplement: +4 percentage points for non-RDE2 diesel cars, applied after the base lookup, then capped at 37%.
Taxable BIK value = P11D value × BIK percentage. Your annual tax = BIK value × your income tax rate. Employer Class 1A NIC (shown for context) = BIK value × 15%.
Frequently asked questions
What is P11D value?
The car's list price including VAT and most factory-fitted options, but excluding the first registration fee and road tax (VED). It's the figure used as the base for company car tax, not necessarily what your employer actually paid.
How much is company car tax on an electric car?
Electric cars pay the lowest BIK percentage of any fuel type — 3% for 2025/26, rising to 4% for 2026/27 and 5% for 2027/28, on a schedule already announced by HMRC. This is dramatically lower than typical petrol or diesel percentages, which can reach up to 37%.
Why does electric range matter for plug-in hybrids?
For hybrids with CO2 emissions of 1–50g/km, HMRC sets the BIK percentage based on how far the car can travel on electric power alone, in bands from "under 30 miles" up to "130 miles or more." A longer electric range gets a lower BIK percentage.
What is the diesel supplement?
An additional 4 percentage points added to the standard BIK rate for diesel cars that don't meet the RDE2 emissions standard, capped at the overall 37% maximum.
Do I pay company car tax monthly or annually?
The tax is calculated annually but usually collected through your monthly payroll via an adjustment to your tax code, so in practice you pay roughly one-twelfth of the annual figure each month.
References & data sources
- HMRC — Company car and car fuel benefit calculator. The official government tool for calculating your exact company car tax — use this to verify any figure from this page.
- GOV.UK — Rates and thresholds for employers. Official BIK percentage bands and diesel supplement rules used directly in this calculator.
- HMRC — Advisory publications on future company car tax rates. The advance-announced 2025/26 through 2027/28 percentage schedule for electric and low-emission hybrid vehicles.
Company car tax involves real money and is genuinely affected by your full personal tax position. This calculator is a planning estimate — always confirm your exact figure using HMRC's own official calculator or your payroll department before making a company car decision.