Company Car BIK Tax Calculator
Vehicle Details
What is BIK Tax?
Benefit in Kind (BIK) tax is charged when you receive a company car for private use. The tax is based on the vehicle’s P11D value, CO₂ emissions, and fuel type. HMRC treats the company car as a taxable benefit, meaning you pay income tax on its value.
How BIK is Calculated
BIK tax = P11D Value × BIK Percentage × Your Income Tax Rate. The BIK percentage depends on CO₂ emissions and ranges from 2% for zero-emission electric vehicles to 37% for high-emission petrol and diesel cars.
BIK Rates by Emission Level (2024-2028)
| CO₂ Emissions (g/km) | Electric Range | 2024/25 | 2025/26 | 2026/27 | 2027/28 |
|---|---|---|---|---|---|
| 0 (Electric) | N/A | 2% | 3% | 4% | 5% |
| 1-50 (PHEV) | ≥130 miles | 2% | 3% | 4% | 5% |
| 1-50 (PHEV) | 70-129 miles | 5% | 6% | 7% | 8% |
| 1-50 (PHEV) | 40-69 miles | 8% | 9% | 10% | 11% |
| 1-50 (PHEV) | 30-39 miles | 12% | 13% | 14% | 15% |
| 1-50 (PHEV) | <30 miles | 14% | 15% | 16% | 17% |
| 51-54 | N/A | 15% | 16% | 17% | 18% |
| 55-59 | N/A | 16% | 17% | 18% | 19% |
| 75-79 | N/A | 20% | 21% | 22% | 23% |
| 100-104 | N/A | 25% | 26% | 27% | 28% |
| 120-124 | N/A | 29% | 30% | 31% | 32% |
| ≥170 | N/A | 37% | 37% | 37% | 37% |
Worked Example
Scenario: Nissan Leaf Electric Vehicle
- P11D Value: £32,000
- CO₂ Emissions: 0 g/km (electric)
- Tax Year: 2025/26
- BIK Rate: 3%
- Income Tax Rate: 20% (basic rate taxpayer)
Calculation:
Taxable BIK Value = £32,000 × 3% = £960
Annual Tax = £960 × 20% = £192
Monthly Tax = £192 ÷ 12 = £16
Comparison with Petrol Car (120 g/km, 30% BIK rate):
Petrol BIK Value = £32,000 × 30% = £9,600
Annual Tax = £9,600 × 20% = £1,920
Annual Saving with Electric: £1,728
How to Reduce Your BIK Tax
Choose Low-Emission Vehicles
Electric and plug-in hybrid vehicles with extended electric range attract the lowest BIK rates. For 2025/26, pure electric vehicles are taxed at just 3%, compared to up to 37% for high-emission petrol or diesel cars.
Opt for Lower P11D Value
The P11D value includes the list price plus optional extras and VAT. Choosing a vehicle with fewer optional extras or a lower base price reduces your taxable BIK value proportionally.
Report Unavailability
If your company car is unavailable for 30 consecutive days or more (e.g., off-road for repairs), you can reduce your BIK liability proportionally. Notify HMRC through your employer.
Make Capital Contributions
Employee contributions towards the purchase price can reduce the taxable P11D value by up to £5,000. This permanently lowers your annual BIK tax for the duration you have the vehicle.
Private Fuel Benefit
If your employer provides fuel for private mileage, this creates an additional taxable benefit. For 2025/26, the fuel benefit charge is £28,200, multiplied by your car’s BIK percentage rate.
Fuel Benefit Example
For a car with a 25% BIK rate:
Fuel Benefit Value = £28,200 × 25% = £7,050
Tax at 20% = £1,410 per year
Tax at 40% = £2,820 per year
Note: Free fuel for private mileage is rarely cost-effective unless you drive substantial private miles. Calculate whether paying for your own fuel would be cheaper.
P11D Value Explained
The P11D value represents the official list price of the vehicle when new, including:
- Manufacturer’s list price
- VAT
- Delivery charges
- Optional accessories and extras
It excludes:
- First registration fee
- Vehicle excise duty (road tax)
- Number plates
Employer National Insurance
Employers pay Class 1A National Insurance at 13.8% on the taxable BIK value. For a £30,000 car with a 20% BIK rate:
Taxable Value = £30,000 × 20% = £6,000
Employer NI = £6,000 × 13.8% = £828 per year
Salary Sacrifice vs Company Car
| Factor | Company Car | Salary Sacrifice (EV) |
|---|---|---|
| Tax Treatment | Pay BIK tax on benefit | Reduced gross salary, lower BIK |
| NI Savings | No employee NI saving | Save employee NI on sacrificed salary |
| Pension Impact | No impact | May reduce pension contributions |
| Typical Annual Saving | N/A | £1,000-£3,000 (electric vehicles) |
Common Questions
When do I start paying BIK tax?
BIK tax is typically collected through your PAYE tax code, which your employer adjusts based on HMRC notification. Tax is due from the first day the car is available for your private use, not from when you start driving it.
Does business mileage affect BIK tax?
No. BIK tax is charged regardless of how many business miles you drive. The tax is based solely on the availability of the car for private use, even if you only use it for commuting.
What counts as private use?
Private use includes any non-business journey, such as commuting between home and your permanent workplace, shopping, leisure trips, and holidays. Only travel to temporary workplaces counts as business use for tax purposes.
Can I have more than one company car?
Yes, but you’ll pay BIK tax on each vehicle. HMRC calculates the tax separately for each car based on its individual P11D value and emissions rating.
What if I only have the car for part of the year?
BIK tax is calculated proportionally. If you have the car for 6 months, you pay 50% of the annual BIK tax. The calculation is based on complete tax months (6 April to 5 April tax year).
Do company vans have BIK tax?
Yes, but the rules differ. For 2025/26, the van benefit charge is a flat £3,960 (regardless of the van’s value), plus £757 if fuel is provided for private use. Zero-emission electric vans are currently exempt from BIK.
How do I find my car’s CO₂ emissions?
Check your vehicle’s V5C registration document (logbook), the manufacturer’s specifications, or use the DVLA vehicle enquiry service. For plug-in hybrids, you also need the zero-emission range, available from the manufacturer or certificate of conformity.
Are classic cars treated differently?
Cars registered before 1 January 1998 have no official CO₂ figure. HMRC applies a flat 37% BIK rate for petrol cars and 41% for diesel (37% + 4% supplement) pre-1998 vehicles without emissions data.
Can I claim tax relief for business mileage?
No. If you have a company car, you cannot claim mileage allowance relief for business journeys. However, if you use your own car for business, you can claim 45p per mile (first 10,000 miles) and 25p thereafter.
What about electric vehicle charging?
Electricity provided at the workplace for charging company electric vehicles is currently exempt from BIK tax. Home charging reimbursement may be taxable unless calculated using HMRC’s advisory electricity rate (currently 9p per mile for fully electric vehicles).
BIK Tax Changes 2024-2028
The UK government announced BIK rates through to 2027/28, providing long-term certainty for company car planning:
- Electric vehicles (0 g/km): Rates rise from 2% (2024/25) to 5% (2027/28), increasing 1% annually
- Ultra-low emission (1-50 g/km): All bands increase by 1% per year
- Higher emission vehicles (51+ g/km): Most bands increase by 1% annually, capped at 37%
- Diesel supplement: Continues at 4% for non-RDE2 compliant vehicles (capped at 37%)
Reporting to HMRC
Employers must report company car benefits to HMRC by 6 July following the end of each tax year using form P11D. Employees receive a copy showing the taxable benefit value. HMRC then adjusts your tax code to collect the BIK tax through PAYE across the following tax year.
Carbon Emission Standards
RDE2 (Real Driving Emissions 2)
RDE2 is the latest Euro 6 emission standard requiring diesel vehicles to meet strict NOx (nitrogen oxide) limits in real-world driving conditions, not just laboratory tests. Diesel cars meeting RDE2 avoid the 4% BIK supplement. Most diesels registered from September 2019 onwards meet this standard.
Electric vs Petrol Cost Comparison
| Vehicle Type | P11D Value | CO₂ (g/km) | BIK Rate 2025/26 | Annual Tax (20%) | Annual Tax (40%) |
|---|---|---|---|---|---|
| Electric (Tesla Model 3) | £42,000 | 0 | 3% | £252 | £504 |
| PHEV (BMW 330e, 60-mile range) | £42,000 | 37 | 9% | £756 | £1,512 |
| Petrol (BMW 320i) | £38,000 | 142 | 33% | £2,508 | £5,016 |
| Diesel RDE2 (BMW 320d) | £40,000 | 118 | 29% | £2,320 | £4,640 |