🚗 2026/27 Tax Year · BIK Calculator

Company Car Tax Calculator

Last updated: January 2026 · 2026/27 UK tax year

Find out exactly how much tax you'll pay on your company car in 2026/27 based on its P11D value and BIK rate.

Company car tax — formally known as Benefit in Kind (BiK) taxation on employer-provided vehicles — is one of the most complex areas of UK employment taxation. The amount of tax you pay on a company car depends on four key variables: the car's P11D value (essentially its list price including standard accessories), the car's official CO2 emissions in g/km, your Income Tax rate (20%, 40%, or 45%), and the current BiK percentage table published by HMRC for that tax year.

From April 2025, the BiK percentages for electric vehicles began rising gradually from their historically low levels, making the tax advantage of EVs smaller than it was in the early 2020s but still significantly lower than petrol or diesel equivalents. For example, a zero-emission EV in 2026/27 has a BiK rate of 3%, while a 150g/km petrol car sits at 33%. On a £40,000 car, a basic rate taxpayer would pay approximately £240/year on the EV versus £2,640/year on the petrol vehicle. Use this calculator to find your exact annual and monthly company car tax liability.

Car Details

P11D Value

List price including extras & VAT. Excludes first registration fee and VED.

BIK Rate (%)

Usually 2% for fully electric, up to 37% for high emissions.

Your Highest Tax Band

The rate you pay Income Tax at on your top slice of earnings.

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Enter the car details to see your tax calculation.

How is Company Car Tax calculated?

When your employer provides you with a company car that is available for private use, HMRC considers it a "Benefit in Kind" (BIK). Because it has a financial value, you have to pay Income Tax on that value.

The Formula

P11D Value × BIK Rate × Income Tax Band = Annual Tax

P11D Value: The list price of the car including optional extras and VAT.
BIK Rate: A percentage (usually 2% to 37%) based on the car's CO2 emissions and fuel type.
Tax Band: The highest rate of Income Tax you pay (20%, 40%, or 45%).

Why Electric Cars (EVs) are best

The government heavily incentivises electric vehicles for company car fleets. For the 2026/27 tax year, the BIK rate for a fully electric car is just 2%.

Compare a £40,000 electric car (2% BIK) with a £40,000 petrol car (say, 30% BIK) for a Higher Rate (40%) taxpayer:

Electric car tax: £40,000 × 2% × 40% = £320 a year
Petrol car tax: £40,000 × 30% × 40% = £4,800 a year

FAQs

Frequently asked questions

How is company car tax calculated?

Company car tax is calculated by multiplying the car's P11D value (list price including optional extras) by its BIK (Benefit in Kind) percentage rate. The resulting figure is your taxable benefit. You then pay income tax on that benefit at your highest marginal rate (20%, 40%, or 45%).

What is the BIK rate based on?

The BIK rate is determined by the car's CO2 emissions and the type of fuel it uses. Electric cars have the lowest BIK rates (currently 2%), while high-emission petrol or diesel cars can have a BIK rate of up to 37%. Diesel cars that don't meet RDE2 standards carry a 4% surcharge.

What is the P11D value?

The P11D value is the list price of the car, plus VAT, plus any optional extras and delivery charges. It does not include the first-year registration fee or the first year's vehicle excise duty (road tax).

Are electric cars good for company car tax?

Yes, electric vehicles (EVs) are incredibly tax-efficient as company cars. For the 2026/27 tax year, the BIK rate for a fully electric car is just 2%. For a £40,000 electric car, a basic rate taxpayer would pay only £160 a year in tax (£13.33 a month).

Do I pay National Insurance on a company car?

As an employee, you do not pay National Insurance on the Benefit in Kind value of a company car. However, your employer must pay Class 1A National Insurance (at 13.8%) on the BIK value.