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🇬🇧 UK-only · Updated for 2026/27 Tax Year

Company Car Tax Calculator 2026/27

Calculate your monthly Benefit-in-Kind (BIK) tax. Compare the new 4% EV rate against petrol equivalents and see exactly how much you can save.

✓New 4% EV Rate✓2027–2030 Roadmap✓P11D Logic✓Free — no sign-up

Car & Tax Details

The list price of the car including VAT and delivery, but excluding first-year registration.

Your Tax Cost (2026/27)

£0.00 / month

(£0.00 per year)

BIK Calculation Breakdown:

P11D Value:£40,000
BIK Rate (2026/27):4.0%
Taxable BIK Value:£0.00
Applied Tax Rate:40%

📈 Future EV Tax Roadmap

The government is increasing EV BIK rates by 1% each year starting in 2027. If you keep this exact car, your annual tax bill will rise to:

2027/28 (5%):£0.00
2028/29 (7%):£0.00
2029/30 (9%):£0.00
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How Is Company Car Tax Calculated in 2026/27?

When your employer provides you with a car that is available for private use, HMRC considers it a "perk" and taxes it as a Benefit-in-Kind (BIK). The amount of tax you pay is determined by three specific factors:

  • The P11D Value: The official list price of the car.
  • The BIK Rate: A percentage set by the government based on the car's CO2 emissions.
  • Your Income Tax Band: Whether you pay basic rate (20%), higher rate (40%), or additional rate (45%) tax. You can check your tax band using our Take-Home Pay Calculator.

Electric Car BIK Rates 2026–2030 — What to Expect

To encourage the transition to electric vehicles, the government set incredibly low BIK rates for fully electric (zero-emission) cars. However, these rates are now slowly rising.

For the 2026/27 tax year, the EV BIK rate is 4% (up from 3% in the previous year). The government has published a clear roadmap showing how these rates will continue to step up over the remainder of the decade:

  • 2026/27: 4%
  • 2027/28: 5%
  • 2028/29: 7%
  • 2029/30: 9%

EV vs Petrol — Side-by-Side Tax Comparison

Even with the rate rising to 4%, an EV is massively cheaper than a petrol equivalent. A £40,000 petrol car might have a BIK rate of 30%. For a higher-rate (40%) taxpayer, that results in an annual tax bill of £4,800. A £40,000 EV at 4% BIK will cost that same taxpayer just £640 a year — a massive saving of over £4,100 per year.

What Is a P11D Value?

The P11D value is the official cash value of your car for tax purposes. It includes the manufacturer's list price, VAT, delivery charges, and any optional factory-fitted extras (like upgraded alloys or a sunroof). It does not include the car's first-year registration fee or the first year of Vehicle Excise Duty (road tax). You can read more about how perks are declared in our P11D Explained guide.

Is a Company Car Worth It in 2026?

The short answer: Yes, if you choose an electric vehicle.

Because of the huge tax savings, many employees are now using Salary Sacrifice schemes to lease EVs. This allows you to pay for the car out of your gross salary (before tax), meaning you save heavily on both Income Tax and National Insurance, while only paying a tiny 4% BIK charge.

Benefit-in-Kind

Frequently asked questions

How is company car tax (BIK) calculated in 2026/27?
Company car tax is calculated by taking the car's P11D value (list price), multiplying it by the vehicle's Benefit-in-Kind (BIK) percentage rate, and then multiplying that figure by your personal income tax bracket (20%, 40%, or 45%).
What is the BIK rate for electric cars in 2026/27?
The BIK rate for fully electric vehicles (EVs) is 4% for the 2026/27 tax year. This is a step up from previous years but remains exceptionally low compared to petrol and diesel cars, which can have rates up to 37%.
What is a P11D value and how is it calculated?
The P11D value is the total list price of the car (including VAT and any factory-fitted optional extras) plus delivery charges. It does NOT include the first-year vehicle excise duty (road tax) or the initial registration fee.
Is a company car worth it tax-wise compared to a car allowance?
If you choose a fully electric vehicle, a company car is incredibly tax-efficient due to the low 4% BIK rate. However, if you choose a high-emission petrol or diesel car, the heavy tax burden (up to 37% BIK) often makes taking a cash car allowance a better financial choice.
How can I reduce my company car tax?
The easiest way to reduce company car tax is to choose a zero-emission electric vehicle (EV) to lock in the 4% BIK rate. Alternatively, choose a Plug-in Hybrid (PHEV) with a long electric-only range, or reduce your overall taxable income to drop from the 40% tax bracket down to the 20% bracket.
Are company car tax rates going up after 2026?
Yes. The government has published a clear roadmap for electric vehicles: the EV BIK rate is 4% in 2026/27, and will rise to 5% in 2027/28, 7% in 2028/29, and 9% in 2029/30.
Does salary sacrifice on an EV save income tax AND NI?
Yes! When you lease an electric vehicle through a salary sacrifice scheme, the lease payments are deducted from your gross pay before tax. This means you save on both Income Tax and National Insurance, making it one of the cheapest ways to run a new car in the UK.
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