Company Car Tax Calculator
Calculate your Benefit in Kind (BIK) tax on company cars with current HMRC rates
Calculation Breakdown:
P11D Value: £0
BIK Rate: 0%
Taxable Benefit: £0
Your Tax Rate: 0%
Understanding Company Car Tax
Company car tax, officially known as Benefit in Kind (BIK) tax, is charged on employees who receive a company car for private use. The tax amount depends on the car’s P11D value, CO₂ emissions, fuel type, and your personal income tax rate.
How Company Car Tax is Calculated
The calculation follows this simple formula:
P11D Value × BIK Rate × Your Income Tax Rate = Annual Company Car Tax
What is P11D Value?
The P11D value represents the official list price of your company car, including:
- Manufacturer’s recommended retail price
- VAT at 20%
- Delivery charges
- Factory-fitted optional extras
It excludes the first-year registration fee and road tax.
BIK Rates for 2025/26 Tax Year
| CO₂ Emissions (g/km) | Electric Range | BIK Rate 2025/26 |
|---|---|---|
| 0 (Electric) | N/A | 3% |
| 1-50 | 130+ miles | 3% |
| 1-50 | 70-129 miles | 6% |
| 1-50 | 40-69 miles | 9% |
| 1-50 | 30-39 miles | 13% |
| 1-50 | Less than 30 miles | 15% |
| 51-54 | – | 16% |
| 55-59 | – | 17% |
| 75-79 | – | 21% |
| 100-104 | – | 26% |
| 150-154 | – | 36% |
| 170+ | – | 37% |
Benefits of Low Emission Vehicles
- Electric cars: Only 3% BIK rate
- Plug-in hybrids: 3-15% depending on electric range
- Significant tax savings compared to petrol/diesel
- Environmental benefits and reduced running costs
- Access to low emission zones
Income Tax Bands 2025/26
- Basic Rate (20%): £12,570 – £50,270
- Higher Rate (40%): £50,271 – £125,140
- Additional Rate (45%): Over £125,140
Scottish residents may have different tax bands and rates.
Reducing Your Company Car Tax
Several strategies can help minimise your company car tax liability:
- Choose an electric or low-emission vehicle
- Consider cars with lower P11D values
- Look for plug-in hybrids with higher electric ranges
- Avoid diesel vehicles unless they meet Euro 6d standards
- Consider salary sacrifice schemes where available
Frequently Asked Questions
Company car tax is deducted from your salary through PAYE on a monthly basis. Your employer calculates the tax and deducts it along with your income tax and National Insurance contributions.
If your company car is restricted to business use only and you cannot use it for private journeys (including commuting), you won’t pay BIK tax. However, this must be formally documented and enforced.
If your company car is unavailable for 30 consecutive days or more (due to repairs, for example), your BIK tax may be reduced proportionally for that period.
HMRC typically announces BIK rates annually in the Budget. Rates for electric vehicles are set to increase by 1% each year from 2025/26 to 2027/28, reaching 5% by 2027/28.
Generally, you cannot claim mileage allowance if you have a company car. However, you may be able to claim a small amount for business journeys in your own car if your company car is temporarily unavailable.
Important Considerations
When choosing a company car, consider the total cost of ownership beyond just the BIK tax:
- Fuel costs (especially relevant for high-mileage drivers)
- Insurance and maintenance (often included with company cars)
- Depreciation (not your concern with a company car)
- Convenience and peace of mind
- Access to newer, safer vehicles with warranty coverage