Company Car Tax Calculator

For the 2026/27 tax year, fully electric company cars have a 4% BIK rate (up from 3% in 2025/26), so the taxable value is 4% of the car's list price. A higher-rate taxpayer (40%) on a £40,000 electric car therefore pays £640 a year in tax, and a basic-rate taxpayer pays £320. The rate rises to 5% in 2027/28.

In 2026/27, BIK percentages depend on CO2 emissions: 4% for zero-emission cars, 4%–16% for plug-in hybrids depending on electric range, then 17% for 51–54 g/km rising one point per 5 g/km to a 37% cap. For example, a petrol car emitting 100 g/km is in the 26% band. The taxable benefit is the car's list price multiplied by the percentage, added to the employee's income for income tax.

The fuel benefit charge applies if the employer pays for all or part of the private fuel used for a company car, and it is calculated using a fixed multiplier of £38,600 for 2026/27. This multiplier is applied to the same BIK percentage used for the car itself, so a 30% fuel benefit rate results in a taxable value of £11,580. Employees must report this on their P11D form, and the tax is collected via the PAYE system.

A company car with a list price of £50,000 and a 25% BIK rate creates a taxable benefit of £12,500 for the 2026/27 tax year. A basic-rate taxpayer would pay £2,500 in income tax on this benefit, while a higher-rate taxpayer would pay £5,000. This amount is separate from any Class 1A National Insurance contributions the employer must pay at 15.05% on the total benefit value.

The main exemption in 2026/27 applies to cars with CO2 emissions of zero, which are taxed at 4% in 2026/27 rather than being fully exempt. There is no full exemption for private use, but employees can avoid the fuel benefit charge if they reimburse their employer for all private fuel used. Additionally, cars used solely for business purposes with no private use are not subject to BIK tax, provided the employer maintains accurate records.