Company Car Tax (BiK) Calculator 2026-27

Company car tax is based on the Benefit-in-Kind (BiK) value of the vehicle. HMRC assigns a BiK percentage to each car based on its CO2 emissions and fuel type. For 2026/27, pure electric vehicles have a BiK rate of 3%, while the highest-polluting petrol or diesel cars reach 37%. You pay income tax on the BiK value at your marginal rate.

The BiK value is calculated as: P11D price (list price including options and delivery, minus the first year registration fee and vehicle excise duty) multiplied by the BiK percentage. If the employer also provides free fuel for private use, a separate fuel benefit charge applies based on a fixed multiplier of £27,800 for 2026/27.

Employers pay Class 1A National Insurance at 15% on the full BiK value. This calculator takes the car's list price, CO2 emissions, fuel type and your tax band to show both your annual tax cost and the employer's NI cost.

How Company Car Tax (BiK) works. Provided to you by your employer, a company car is a 'Benefit in Kind' (BiK) — taxable as if it were salary. BiK value = car list price (including options) × BiK %. The BiK % depends on CO2 emissions. For 2026/27: 0g/km electric 3% (rising to 7% by 2030); 1-50g/km PHEV 4-15% (depending on electric range); 51g+ petrol 16-39%; diesel similar +4% (non-RDE2 cars). Multiply BiK value by your income tax rate to get annual tax cost.

EV company cars are exceptionally tax-efficient — but window closing. A £50,000 BMW i4 at 3% BiK = £1,500 BiK value. Higher-rate taxpayer pays 40% on this = £600/year tax. The same £50,000 petrol car at 32% BiK = £16,000 BiK value × 40% = £6,400/year tax. EV saves £5,800/year. BiK rate rises: 4% in 2027/28, 5% in 2028/29, 6% in 2029/30, 7% in 2030/31. Still much cheaper than ICE even at 7%. Combined with salary sacrifice, EV company cars are typically the best-value perk available.

Fuel benefit charge — usually a bad deal. If your employer pays for personal fuel in a company car, you're taxed on an additional fuel benefit charge: £27,800 (2026/27) × BiK % × your income tax rate. For 32% BiK car: 32% × £27,800 = £8,896 BiK × 40% tax = £3,558/year tax for personal fuel. Most employees would pay less by buying their own fuel and claiming HMRC business mileage rates (Advisory Fuel Rates) for work miles. Always calculate before accepting employer-paid fuel.

Practical car vs cash allowance decision. Many employers offer 'cash allowance instead of company car' (typically £4-£8k/year). Compare: cash allowance is taxable salary (full income tax + NI + pension implications). Company car BiK is taxable but cheaper for EVs. Cash gives ownership flexibility; company car gives no maintenance costs, insurance, MOT hassle. For ICE cars (>30% BiK), cash usually wins. For EVs (<10% BiK), company car wins by £1,000-£3,000/year. Many employers offer EV salary sacrifice — combining both worlds.