Company Car Tax Calculator
Estimate your Benefit-in-Kind (BiK) tax for the 2026/27 tax year
Tax Breakdown (2026/27)
Company Car Tax Calculator UK 2026/27: Work Out Your BIK Tax
Work out your company car Benefit-in-Kind (BIK) tax for 2026/27 in seconds. Enter your car's P11D value and CO2 emissions to see your annual and monthly tax, plus what it costs your employer.
How company car tax actually works
Company car tax โ HMRC calls it Benefit-in-Kind (BIK) tax โ is what you pay for the privacy of using a car your employer owns or leases for personal journeys, including your regular commute. HMRC doesn't tax the car itself. It taxes a slice of the car's value, and that slice grows or shrinks depending on how much CO2 the car produces.
The calculation has three ingredients:
- P11D value โ the car's list price, including VAT, delivery and any factory-fitted options, but not the discount you might have negotiated.
- Appropriate percentage โ a figure HMRC sets each tax year based on the car's official CO2 emissions (and electric range for plug-in hybrids).
- Your income tax rate โ 20%, 40% or 45% in England, Wales and Northern Ireland (Scotland uses its own bands).
Multiply the first two together and you get the car's taxable benefit for the year. Multiply that by your tax rate and you get what actually comes out of your pay. In formula form:
Taxable benefit = P11D value ร Appropriate percentage
Your annual tax = Taxable benefit ร Your income tax rate
A ยฃ30,000 petrol car at 26% BIK gives a taxable benefit of ยฃ7,800. A basic-rate taxpayer pays 20% of that โ ยฃ1,560 a year, or ยฃ130 a month, taken straight from payroll alongside normal PAYE tax. A higher-rate taxpayer on the same car pays ยฃ3,120 a year. Same car, same taxable benefit, different bill โ because company car tax always follows your marginal income tax rate, not a flat scale.
2026/27 BIK rate table (all CO2 bands)
These are HMRC's official appropriate percentages for the 2026/27 tax year (6 April 2026 to 5 April 2027), published in the Employment Income Manual. Round your car's CO2 figure down to the nearest 5g/km if it falls between bands.
| CO2 emissions | Electric range | 2026/27 rate |
|---|---|---|
| 0 g/km (fully electric) | โ | 4% |
| 1โ50 g/km | 130+ miles | 4% |
| 1โ50 g/km | 70โ129 miles | 7% |
| 1โ50 g/km | 40โ69 miles | 10% |
| 1โ50 g/km | 30โ39 miles | 14% |
| 1โ50 g/km | Under 30 miles | 16% |
| 51โ54 g/km | โ | 17% |
| 55โ59 g/km | โ | 18% |
| 60โ64 g/km | โ | 19% |
| 65โ69 g/km | โ | 20% |
| 70โ79 g/km | โ | 21% |
| 80โ84 g/km | โ | 22% |
| 85โ89 g/km | โ | 23% |
| 90โ94 g/km | โ | 24% |
| 95โ99 g/km | โ | 25% |
| 100โ104 g/km | โ | 26% |
| 105โ109 g/km | โ | 27% |
| 110โ114 g/km | โ | 28% |
| 115โ119 g/km | โ | 29% |
| 120โ124 g/km | โ | 30% |
| 125โ129 g/km | โ | 31% |
| 130โ134 g/km | โ | 32% |
| 135โ139 g/km | โ | 33% |
| 140โ144 g/km | โ | 34% |
| 145โ149 g/km | โ | 35% |
| 150โ154 g/km | โ | 36% |
| 155 g/km and above | โ | 37% (maximum) |
Diesel cars that don't meet the RDE2 (Real Driving Emissions 2) standard carry an extra 4 percentage points on top of their band, capped at the 37% maximum. Most diesels registered since 2018 do meet RDE2 โ check your V5C log book or ask your leasing company if you're not sure. Source: HMRC Employment Income Manual, EIM24705.
Worked examples
Numbers make more sense next to a real car. Here's how three common scenarios play out for the 2026/27 tax year.
| Scenario | P11D value | Rate | Taxable benefit | Basic rate (20%) | Higher rate (40%) |
|---|---|---|---|---|---|
| Fully electric hatchback | ยฃ28,000 | 4% | ยฃ1,120 | ยฃ224/yr (ยฃ18.67/mo) | ยฃ448/yr (ยฃ37.33/mo) |
| Mid-size petrol SUV (118g/km) | ยฃ34,000 | 29% | ยฃ9,860 | ยฃ1,972/yr (ยฃ164/mo) | ยฃ3,944/yr (ยฃ329/mo) |
| Diesel estate, non-RDE2 (135g/km) | ยฃ31,000 | 37% (33%+4%) | ยฃ11,470 | ยฃ2,294/yr (ยฃ191/mo) | ยฃ4,588/yr (ยฃ382/mo) |
The gap between the electric hatchback and the diesel estate โ both realistic mid-range company cars โ is over ยฃ2,000 a year for a basic-rate taxpayer, and more than ยฃ4,100 for a higher-rate taxpayer. That's the entire point of HMRC's current tax structure: it is deliberately built to make electric cars the cheap option and high-emission diesels the expensive one.
Why electric company cars cost so much less
Four percent might look like an oddly specific number, but it's part of a published multi-year plan. The government confirmed the following schedule at the November 2025 Budget, and it hasn't changed since:
| Tax year | Electric car BIK rate |
|---|---|
| 2025/26 | 3% |
| 2026/27 | 4% |
| 2027/28 | 5% |
| 2028/29 | 7% |
| 2029/30 | 9% (rate then holds) |
Even at 9% in 2029/30, an electric car will still sit well below the 37% ceiling that applies to the highest-emission petrol and diesel cars. If you're choosing a company car today, the electric rate for the year you take delivery generally applies for the life of that agreement โ so locking in a lease now secures a lower rate than waiting a year or two would.
Plug-in hybrids are taxed differently from full EVs. A PHEV with a genuine 130-mile-plus electric range gets the same 4% rate as a full EV. Drop below 30 miles of electric range and the same car jumps to 16% โ over four times the tax on an identical CO2 figure. Always check the manufacturer's official electric range, not just the headline "low emissions" marketing figure.
The fuel benefit charge, explained
If your employer also pays for fuel you use on personal journeys โ not just business mileage โ that's a separate taxable benefit on top of the car itself, and it catches a lot of drivers off guard.
The fuel benefit charge is calculated using a fixed annual figure set by HMRC (the "car fuel benefit multiplier"), multiplied by the same appropriate percentage as your car. For 2026/27, that multiplier is ยฃ29,200.
Fuel benefit = ยฃ29,200 ร Appropriate percentage
Your tax on it = Fuel benefit ร Your income tax rate
So on a 29% petrol car, the fuel benefit is ยฃ29,200 ร 29% = ยฃ8,468. A basic-rate taxpayer pays 20% of that โ ยฃ1,693.60 a year โ just for having private fuel covered. That's often more than most people would spend filling up themselves for personal trips, which is why many company car drivers choose to pay for their own private fuel and claim back business mileage at HMRC's advisory rates instead. The charge is also all-or-nothing: using employer fuel for even one private journey triggers the full annual charge, there's no partial or pro-rata version based on how much you actually used.
Common mistakes that inflate your bill
- Using the discounted price instead of P11D value. HMRC always uses the list price, not what your employer negotiated. A company that got 15% off a ยฃ40,000 car still pays tax based on ยฃ40,000.
- Guessing the CO2 figure. Real-world fuel economy claims from adverts aren't the same as the official WLTP CO2 figure HMRC requires. Always pull the number from the certificate of conformity or your leasing company's data sheet.
- Forgetting the diesel supplement. A 4-percentage-point addition on non-RDE2 diesels is easy to miss and can meaningfully change your monthly deduction.
- Not accounting for part-year availability. If the car wasn't available to you for the full tax year โ a new job partway through the year, or a period the car was off the road for repair โ your taxable benefit is reduced proportionally. Payroll should handle this, but it's worth checking your P11D.
- Ignoring capital contributions. If you paid a lump sum towards the car (up to ยฃ5,000), that amount is deducted from the P11D value before the percentage is applied โ it directly lowers your tax.
What it costs your employer
Company car tax isn't just an employee cost. Employers pay Class 1A National Insurance on the same taxable benefit, at 15% for 2026/27. On that ยฃ34,000 petrol SUV example above (taxable benefit ยฃ9,860), the employer's Class 1A bill is ยฃ1,479 โ paid annually, reported on the P11D(b), and due by 19 July following the tax year (22 July if paying electronically).
This is one reason many fleets are moving toward electric: the same ยฃ34,000 car as an EV at 4% would have a taxable benefit of just ยฃ1,360, cutting the employer's Class 1A bill to ยฃ204 โ a saving of well over ยฃ1,200 per vehicle, per year, before counting the employee's own tax saving.
How company car tax fits your wider pay
Company car tax doesn't exist in isolation โ it's one line among several that shape what actually lands in your account each month, alongside income tax, National Insurance, pension contributions and, for some drivers, student loan repayments. If you want the complete picture rather than just the car benefit on its own, run your full salary through our UK income tax calculator to see take-home pay after tax and National Insurance, factoring in a company car benefit alongside your salary.
Frequently asked questions
How is company car tax calculated?
Multiply the car's P11D value by its appropriate percentage (based on CO2 emissions) to get the taxable benefit, then multiply that by your income tax rate โ 20%, 40% or 45%. The result is what you pay in tax for the year, usually collected through your monthly payslip via an adjusted tax code.
Is a company car tax calculator accurate?
A calculator gives a reliable estimate when you enter the correct P11D value and official CO2 figure, but your actual payslip deduction depends on your specific tax code, payroll rounding, and any other benefits or allowances HMRC has already factored in. Treat the result as a strong planning estimate, not a guaranteed final figure.
What is a P11D value?
It's the car's full list price โ including VAT, delivery charges and any factory-fitted accessories โ but excluding the first registration fee and Vehicle Excise Duty. It's not the price your employer actually paid after any discount.
Do I pay company car tax if I don't use the car privately?
Genuine pool cars โ available to multiple employees, not normally kept overnight at anyone's home, and used only for business โ are exempt. If the car sits on your driveway overnight or you use it for your commute, HMRC treats that as private use, and the benefit is taxable.
How much is company car tax on an electric car in 2026/27?
4% of the car's P11D value. On a ยฃ35,000 electric car, that's a ยฃ1,400 taxable benefit โ ยฃ280 a year for a basic-rate taxpayer, or ยฃ560 a year at the higher rate.
Does salary sacrifice change how company car tax is calculated?
No โ the BIK calculation is identical whether the car comes through a standard company car scheme or a salary sacrifice arrangement. What changes is that you're also giving up gross salary, which is where most of the tax and National Insurance saving in salary sacrifice schemes actually comes from.