Company Car Tax Calculator
Calculate the Benefit in Kind (BIK) tax you'll pay on a company car. See why electric vehicles are so tax-efficient.
Updated for 2025/26 tax year
Vehicle Details
Original list price including extras
Your Tax Bill
Track All Your Benefits in Kind
AccountsOS tracks company car tax, private health insurance, and other BIKs so you always know your true tax position.
Get Started FreeUnderstanding Company Car Tax (BIK)
When your company provides you with a car for private use, you pay tax on this "Benefit in Kind" (BIK). The amount depends on the car's value and CO2 emissions.
How BIK is Calculated
- Take the car's list price (P11D value)
- Multiply by the BIK percentage (based on CO2)
- Tax this amount at your marginal rate
Why Electric Cars Win
Electric cars have just a 5% BIK rate in 2025/26, compared to up to 37% for high-emission petrol/diesel cars. On a £40,000 car, that's the difference between paying £800/year (EV) vs £5,920/year (37% petrol).
Diesel Supplement
Diesel cars that don't meet RDE2 emission standards pay an extra 4% BIK, capped at 37% maximum. Most diesels registered before 2019 are affected.
Frequently Asked Questions
Common questions about UK company car tax, BIK rates, and how to minimise your tax bill.
How is company car tax calculated in the UK?
Company car tax (Benefit in Kind or BIK) is calculated by multiplying the car's P11D value (list price including options) by the BIK percentage rate (determined by CO2 emissions), then taxing that amount at your personal income tax rate. For example, a £30,000 car with 25% BIK rate creates a £7,500 taxable benefit. A 40% taxpayer would pay £3,000/year in tax.
What is Benefit in Kind (BIK) for company cars?
Benefit in Kind (BIK) is the tax you pay when your employer provides you with a company car for personal use. HMRC treats this perk as additional income, so you're taxed on the car's value. The BIK rate ranges from 2% for zero-emission electric vehicles to 37% for high-polluting cars. Your employer also pays Class 1A National Insurance (13.8%) on the benefit.
Are electric company cars tax-free in the UK?
Electric company cars aren't completely tax-free, but they have the lowest BIK rate of just 5% in 2025/26 (rising to 6% in 2026/27 and 7% in 2027/28). This makes them extremely tax-efficient. A £40,000 electric car costs a 40% taxpayer just £800/year in tax, compared to £5,920 for a petrol car at the 37% maximum rate. Electric cars are also exempt from the diesel supplement.
Is a company car worth it compared to a car allowance?
It depends on the car and your tax rate. Electric company cars are almost always better value due to the 5% BIK rate. For petrol/diesel cars, a company car becomes less attractive as emissions increase. A car allowance is taxed as salary (income tax + NI), typically 40-50% for higher earners. Calculate both options: if your company car BIK tax is lower than the tax on an equivalent allowance, the company car wins.
What is the P11D value of a company car?
The P11D value is the car's list price when new, including VAT, delivery charges, and any optional extras fitted before delivery. It does not include road tax or first registration fee. This value is used to calculate your BIK tax and remains fixed for the lifetime of the company car, even if the car depreciates. You can find the P11D value on your P11D form from your employer or check the manufacturer's original list price.
Do I pay company car tax if I only use it for business?
If you genuinely only use your company car for business journeys and it's not available for private use, you shouldn't pay BIK tax. However, HMRC defines 'available for private use' very broadly — if you could use it privately (even if you don't), you're typically taxable. You'd need a formal agreement prohibiting private use, and the car must be kept at work premises. Commuting counts as private use. Pool cars shared by multiple employees may be exempt if they meet strict HMRC criteria.