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 4%, while the highest-polluting petrol or diesel cars reach 37%. You pay income tax on the BiK value at your marginal rate, so the same car costs more the higher your tax band sits.

The BiK value is the P11D price, meaning the list price including options and delivery but minus the first year registration fee and vehicle excise duty, multiplied by the BiK percentage. A £35,000 petrol car emitting 120g/km falls at 29%, giving a BiK value of £10,150. A higher-rate taxpayer pays 40% of that, which is £4,060 a year, and the employer pays Class 1A National Insurance at 15% on the full BiK value, a further £1,522.50.

The percentage bands do most of the work. Zero-emission cars sit at 4%, rising to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30. Plug-in hybrids between 1 and 50g/km are graded by electric range: 4% at 130 miles or more, 7% from 70 to 129 miles, 10% from 40 to 69, 14% from 30 to 39, and 16% below 30. From 51 to 54g/km the rate is 17%, then it climbs 1pp for every 5g/km, pausing at 21% across the 70 to 79g/km range and capping at 37%. Diesels that do not meet RDE2 add 4%, still within that 37% ceiling.

The gap between an electric car and its petrol equivalent is the largest number on this page. A £50,000 BMW i4 at 4% produces a BiK value of £2,000, so £800 a year for a higher-rate taxpayer. The same £50,000 spent on a petrol car at 32% produces £16,000 of BiK and £6,400 of tax, a difference of £5,600. The electric rate is scheduled to rise, but even at 9% it stays far below the petrol figure, and combined with salary sacrifice an EV company car is typically the best-value perk on offer.

If the employer also provides free fuel for private use, a separate fuel benefit charge applies, based on a fixed multiplier of £29,200 for 2026/27. That multiplier is taken at the car's BiK percentage and then taxed at your marginal rate, so a car at 32% generates a £9,344 benefit and £3,738 of tax a year for a higher-rate payer. Most employees would pay less by buying their own fuel and claiming HMRC business mileage through the Advisory Fuel Rates, so the sums are worth doing before accepting the offer.

Many employers offer a cash allowance instead of a company car, typically £4k to £8k a year. The allowance is taxable salary, so income tax, National Insurance and pension implications all follow it, whereas the company car brings BiK tax but no maintenance, insurance or MOT bills to manage. As a rule of thumb, cash usually wins for petrol and diesel cars above 30% BiK, while the company car wins by £1,000 to £3,000 a year for EVs below 10%. An EV salary sacrifice scheme, which many employers now run, brings both together.

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, which is the figure your employer weighs up when a scheme is being designed. Run the same list price at two different emission levels and the scale of the CO2 effect becomes obvious immediately.