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Company Car Tax Calculator

Calculate your company car BIK tax for 2025/26. Compare electric vs petrol BIK rates, estimate salary sacrifice savings, and see how much you could save by switching to an EV company car.

Calculate the Benefit in Kind (BIK) tax on your company car
£
List price including options, excluding road tax
g/km
Found on V5C or manufacturer specs
£
Employee payment towards the car (max £5,000)
Adds fuel benefit charge to your BIK
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How to Use This Calculator

My Car Tax tab

Enter your company car's list price (P11D value), CO2 emissions, fuel type, and your income tax band. The calculator works out the BIK percentage, BIK value, and your annual and monthly tax. Expand "More options" to add a capital contribution (up to £5,000) or calculate the fuel benefit charge if your employer pays for private fuel.

EV vs Petrol tab

Compare the tax cost of switching from a petrol or diesel company car to a pure electric vehicle. Enter the list price and your current car's CO2 emissions. See the annual saving, monthly saving, and 3-year lease total comparison. The tab also shows projected costs when EV BIK rises to 4% in 2026/27.

Salary Sacrifice tab

Calculate the true cost of getting an EV through salary sacrifice. Enter your gross salary, car list price, and monthly lease cost. See the income tax and NI savings from sacrificing gross pay, offset against the BIK tax you'll pay. Compare the net monthly cost vs paying for a car privately from net salary.

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The Formula

Company car tax is based on the Benefit in Kind (BIK) value, calculated as:

BIK Value = (List Price − Capital Contribution) × BIK%

Annual Tax = BIK Value × Income Tax Rate

Monthly Tax = Annual Tax ÷ 12

Fuel Benefit Tax = Fuel Benefit Multiplier (£28,200) × BIK% × Tax Rate

Salary Sacrifice Saving = (Lease Cost × Tax Rate) + (Lease Cost × NI Rate) − BIK Tax

The BIK percentage depends on the car's CO2 emissions and fuel type. Pure electric vehicles have the lowest rate at just 3% for 2025/26, while the highest-emitting petrol and diesel cars reach 37%. Diesel cars that are not RDE2 compliant incur an additional 4% supplement (capped at 37%).

The list price used for BIK is the P11D value — the manufacturer's list price including options and delivery charges, but excluding the first year's road tax and registration fee.

Example

David — Higher rate taxpayer, choosing between diesel and electric

David is a higher rate taxpayer (40%) offered a company car. He's comparing a £35,000 BMW 320d (120 g/km diesel, non-RDE2) with a £40,000 Tesla Model 3 (0 g/km electric).

BMW 320d (diesel, 120 g/km)

List price£35,000
CO2 emissions120 g/km
Base BIK rate (120-124 band)29%
Diesel supplement (+4%)33%
BIK value£11,550
Annual tax (40%)£4,620
Monthly cost£385

Tesla Model 3 (electric, 0 g/km)

List price£40,000
CO2 emissions0 g/km
BIK rate (EV 2025/26)3%
BIK value£1,200
Annual tax (40%)£480
Monthly cost£40
Annual saving with EV£4,140
Monthly saving£345
3-year lease saving£12,420

Even though the Tesla costs £5,000 more, David saves £4,140 per year in tax by choosing electric. Over a 3-year lease, that's £12,420 in tax savings alone — before factoring in lower fuel and maintenance costs.

FAQ

Benefit in Kind (BIK) is the tax you pay on non-cash perks from your employer, including company cars. HMRC treats the use of a company car as a taxable benefit. The BIK value is calculated as the car's list price multiplied by a percentage based on its CO2 emissions and fuel type. You then pay income tax on this BIK value at your marginal rate (20%, 40%, or 45%). Your employer also pays Class 1A National Insurance (13.8%) on the BIK value.
Company car tax is calculated in three steps: (1) Take the car's P11D value (list price including options and delivery, minus registration fee and road tax). (2) Multiply by the BIK percentage from HMRC's CO2 emission bands — this gives the BIK value. (3) Multiply the BIK value by your income tax rate (20%, 40%, or 45%) to get your annual tax bill. For diesel cars that are not RDE2 compliant, add 4% to the BIK rate (capped at 37%). Employee capital contributions of up to £5,000 can reduce the P11D value used in the calculation.
For most taxpayers, a pure electric company car is significantly cheaper in BIK tax. The 2025/26 EV BIK rate is just 3%, compared to 20-37% for petrol and diesel cars. For a higher rate taxpayer with a £40,000 car, the annual BIK tax on an EV is just £480, versus £3,200-£5,920 for a comparable ICE vehicle. Even as EV BIK rises to 4% (2026/27) and 5% (2027/28), the tax advantage remains substantial. Factor in lower fuel costs (electricity vs petrol), reduced maintenance, and zero-emission zone access, and EVs are the clear winner for company car drivers.
If your employer provides fuel for private use (not just business mileage), you'll pay an additional fuel benefit charge. For 2025/26, this is calculated using a flat multiplier of £28,200 × your car's BIK percentage × your income tax rate. For a car with a 29% BIK rate and a 40% taxpayer, the fuel benefit tax is £3,271 per year. The only way to avoid the fuel benefit charge is to reimburse your employer for all private fuel, or to drive an electric car (where the 3% BIK makes the fuel benefit charge minimal at just £338/year for a 40% taxpayer).
Salary sacrifice is an arrangement where your employer reduces your gross salary by the monthly lease cost of a company car. Because the sacrifice comes from gross pay (before tax and NI), you save income tax and National Insurance on the amount sacrificed. In exchange, you pay BIK tax on the car. For electric vehicles with their low 3% BIK rate, the tax and NI savings far outweigh the BIK charge, making salary sacrifice very attractive. For example, a 40% taxpayer sacrificing £400/month saves £192 in tax and NI, but pays only around £40-50 in monthly BIK tax. Your employer also saves on employer NI (13.8%) on the sacrificed amount. Note that salary sacrifice reduces your pensionable earnings and may affect mortgage applications.

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