How is UK Company Car Benefit in Kind (BIK) calculated?

Company car tax is calculated by multiplying the vehicle's P11D value (list price including VAT, options, and delivery, minus employee capital contributions) by its HMRC BIK percentage band (determined by CO2 emissions and electric range), and then multiplying that taxable benefit figure by your marginal Income Tax rate (20%, 40%, or 45%).

What is the BIK rate for pure electric vehicles (EVs)?

For pure electric cars (0 g/km CO2), the BIK rate is 2% for the 2024/2025 tax year, rising to 3% for 2025/2026, 4% for 2026/2027, and 5% for 2027/2028. This makes EVs substantially cheaper in company car tax compared to petrol or diesel vehicles, which typically attract 25% to 37% BIK.

What is the P11D value of a company car?

The P11D value is the official list price of the car published by the manufacturer, including VAT, optional extras fitted, and delivery charges. It excludes the first-year vehicle excise duty (VED road tax) and the first registration fee. Capital contributions by the employee up to £5,000 reduce the taxable P11D value.

How does salary sacrifice for electric cars work in the UK?

Under an EV salary sacrifice scheme, you agree to give up a portion of your gross monthly salary before tax and National Insurance in exchange for a fully insured, maintained electric company car. Because you only pay 2% or 3% BIK tax on an EV, you save 20% to 45% Income Tax plus 8% employee NI on the sacrificed salary, typically saving 30% to 50% compared to a personal lease.

Is private fuel provided by the employer taxable?

Yes. If your employer provides fuel for private personal journeys, HMRC applies a statutory Car Fuel Benefit. For 2024/25 and 2025/26, the statutory fuel multiplier is £27,800. The taxable fuel benefit equals £27,800 multiplied by your car's BIK rate, taxed at your marginal income tax rate.

HMRC 2024/25 & 2025/26 BIK Rates • Pure EV 2%–3% Tiers

UK Company Car Tax (BIK) Calculator

Accurately compute Benefit-in-Kind (BIK) tax liability, annual & monthly PAYE deductions, fuel benefit, and EV salary sacrifice tax savings under current HMRC statutory tables.

1 Vehicle Specifications & P11D Value HMRC Approved Bands

Powertrain & Fuel Type

Applicable Tax Year

P11D Value (£)

List price + extras + VAT (excl. road tax)

Capital Contribution (£)

Deductible upfront contribution (max £5,000)

Popular Presets:

2 Employee Tax Band & Fuel Benefit

Your Marginal Income Tax Rate

Employer Pays for Private Fuel (Fuel Benefit Charge)

Statutory £27,800 multiplier applied. Electric charging provided at workplace is 100% exempt from fuel BIK.

EV Salary Sacrifice vs Private Lease

Save up to 45% Tax

Compare taking an EV through an employer salary sacrifice scheme (tax + NI shielded) versus receiving a taxable cash allowance or leasing privately.

Gross Monthly Salary Sacrifice (£)

Private Lease Quote (£/mo net)

True Net Monthly Cost (Sacrifice - Tax Savings + BIK): £368.50 / mo

Employee Annual BIK Tax 2% BIK Rate

£360.00 / year

Deducted automatically from your monthly salary through your PAYE tax code adjustment.

Monthly Cost £30.00 / mo

Taxable BIK Value £900.00

Tax Assessment Breakdown

P11D Value: £45,000.00

Less Capital Contribution: -£0.00

Net Taxable Car Value: £45,000.00

HMRC BIK Percentage Applied: 2.0%

Annual Car Benefit: £900.00

Private Fuel Benefit (£27.8k base): £0.00

Total Taxable Benefit to Employee: £900.00

Employee Marginal Tax Rate: 40.0%

Employee Annual Tax: £360.00

Employer NI & Corporation Tax

Class 1A NI

Employer Class 1A NI (13.8% / 15.0%): £124.20 / yr

Estimated Corporation Tax Relief (25%): -£256.05

Employers pay Class 1A NI on the taxable benefit value. Pure electric cars provide massive employer NI savings compared to fossil fuel cars.

HMRC Electric Car BIK Tax Trajectory (2024–2028)

The UK government has committed to gradual 1% annual increases for zero-emission electric vehicles, keeping EV company car tax exceptionally competitive compared to petrol and diesel alternatives.

Tax Year	Pure EV BIK %	Annual Tax on £45,000 EV (20% Band)	Annual Tax on £45,000 EV (40% Band)	Equivalent Petrol (30% BIK)
2024 / 2025	2.0%	£180.00 (£15/mo)	£360.00 (£30/mo)	£5,400.00 (£450/mo)
2025 / 2026	3.0%	£270.00 (£22.50/mo)	£540.00 (£45/mo)	£5,580.00 (£465/mo)
2026 / 2027	4.0%	£360.00 (£30/mo)	£720.00 (£60/mo)	£5,760.00 (£480/mo)
2027 / 2028	5.0%	£450.00 (£37.50/mo)	£900.00 (£75/mo)	£5,940.00 (£495/mo)

Frequently Asked Questions

How does HMRC collect company car tax from my wages?

Company car tax is collected through your PAYE tax code. Your employer reports the car details on a P46(Car) or through real-time payroll. HMRC reduces your tax-free Personal Allowance by the car's taxable BIK value, causing an equal monthly tax deduction across your pay slips throughout the year.

Is workplace EV charging considered a taxable Benefit-in-Kind?

No. Electricity is not legally classified as a fuel under HMRC tax rules. If your employer provides EV charging points at or near the workplace, charging both company-owned and privately-owned electric cars is completely exempt from BIK tax, provided the charging facilities are made available to all employees generally.

What happens if I only have the company car for part of the year?

If the car is made available to you for only part of the tax year (e.g. you joined or left mid-year, or the vehicle was off the road continuously for at least 30 consecutive days), the taxable BIK amount is reduced pro-rata on a strict daily basis (multiplied by days available divided by 365).

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