Calculate the Benefit-In-Kind (BIK) tax on company cars for 2025/26 and 2026/27. Compare electric, hybrid, petrol and diesel options to find the most tax-efficient choice for you and your business.
Compare the full buying or leasing and running costs alongside personal benefit-in-kind tax and the company’s tax position. This estimate shows company car tax and employer NI only, so it cannot establish which ownership route is cheaper on its own.
A fully electric company car has a benefit-in-kind rate of 4% in 2026/27, applied to its P11D value. You then pay Income Tax on that benefit at your applicable rate, and the employer pays Class 1A NI separately; a low BIK rate does not remove the car’s purchase and running costs.
It normally uses the car’s list price when new, including qualifying accessories, rather than a discounted or used-car purchase price. The benefit percentage depends on CO₂ emissions, fuel type and, for qualifying hybrids, electric range.
The benefit may be taxed through payroll or collected through an adjustment to your PAYE tax code, with any remaining liability settled as required. An annual tax estimate divided by 12 is not a guarantee of the deduction on each payslip.
Approved mileage rates for using your own car do not apply to a company car. If you personally pay for business fuel or electricity, reimbursement can use the applicable HMRC advisory rate or another supported amount; private fuel can create a separate benefit excluded here.
The taxable benefit can be reduced for periods when the car is not available, subject to HMRC’s availability rules. This estimate assumes full-year availability and excludes employee contributions and salary sacrifice, so ask payroll or your accountant to check any adjustment.