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Company Car Tax Calculator 2026/27

Find out exactly how much tax you will pay on your company car. Enter your car details below to see the BIK rate, annual taxable benefit, and the monthly tax deducted from your pay for the 2026/27 tax year.

Reviewed by Richard Ross · Last updated April 2026

List price including options and delivery, minus the first year of road tax

Enter 0 for a fully electric vehicle

How Company Car Tax Calculator 2026/27 works

How BIK tax is calculated

Company car benefit-in-kind (BIK) tax is calculated in three steps. First, HMRC determines the BIK rate from a table based on the car's CO2 emissions and fuel type. Second, the BIK rate is applied to the P11D value to give the annual taxable benefit — the amount added to your income. Third, your income tax rate (20%, 40%, or 45%) is applied to that benefit to give your annual tax cost. Formula: Annual tax = P11D value × BIK rate × income tax rate. For example: P11D £35,000, BIK rate 28% (petrol, 120 g/km), income tax 40% → Annual tax = £35,000 × 28% × 40% = £3,920 per year (£327/month).

BIK rates by CO2 band for 2026/27

BIK rates increase with CO2 emissions. Key bands for 2026/27: 0 g/km (electric) = 2%. 1–50 g/km = 5–14% depending on electric range (PHEVs). 51–100 g/km = 18–22%. 101–125 g/km = 25–29%. 126–150 g/km = 30–34%. 151–175 g/km = 35–36%. 176+ g/km = 37% (maximum). Diesel cars not meeting the RDE2 standard receive a 4 percentage point surcharge on top of their band rate, capped at 37%. Most diesel cars registered from September 2017 onward meet RDE2.

Worked example: £35,000 petrol car vs equivalent EV

Petrol car: P11D £35,000, 120 g/km CO2, BIK rate 28%, higher-rate taxpayer (40%). Annual taxable benefit: £35,000 × 28% = £9,800. Annual tax: £9,800 × 40% = £3,920. Monthly tax deducted from pay: £327. Electric equivalent: P11D £40,000 (EVs typically cost more), 0 g/km, BIK rate 2%. Annual taxable benefit: £40,000 × 2% = £800. Annual tax: £800 × 40% = £320. Monthly tax: £27. Difference: £3,600 per year (£300/month) less tax on the EV despite a higher P11D. Over 3 years the EV saves £10,800 in tax for a higher-rate taxpayer.

Source: HMRC — Company car tax rates 2026/27 (gov.uk/government/publications/rates-and-allowances-benefit-in-kind-company-car-tax). HMRC — P11D expenses and benefits (gov.uk/paye-online/p11d).

Frequently asked questions

How is company car tax calculated in the UK?

HMRC charges benefit-in-kind (BIK) tax on company cars. The tax is calculated as: P11D value x BIK rate x your income tax rate. The BIK rate depends on the car's CO2 emissions and fuel type. For 2026/27, rates range from 2% for pure electric cars to 37% for the highest-emission vehicles.

What is the P11D value?

The P11D value is the car's list price including VAT, optional extras, and delivery charges, but excluding the first year of vehicle excise duty (road tax) and the vehicle registration fee. Your employer or leasing company can confirm the exact P11D value for your car.

What is the BIK rate for electric cars in 2026/27?

The BIK rate for fully electric company cars (0 g/km CO2) is 2% in 2026/27. This is significantly lower than petrol or diesel cars, making electric vehicles extremely tax-efficient as company cars. HMRC has confirmed this rate will rise gradually in future years.

What is the diesel supplement for non-RDE2 cars?

Diesel cars that do not meet the Real Driving Emissions Step 2 (RDE2) standard face a 4% surcharge on their BIK rate, up to a maximum of 37%. Most diesel cars registered from September 2017 onward meet RDE2. Check your V5C or ask the manufacturer if unsure.

Can I reduce my company car tax bill?

The most effective way to reduce company car tax is to choose a car with lower CO2 emissions. Switching from a petrol car at 20-30% BIK to an electric car at 2% BIK can save thousands per year. You could also ask your employer about salary sacrifice EV schemes, which offer additional NI savings.

How will BIK rates change in future years?

HMRC has published BIK rates through to 2027/28. Electric vehicle rates are set to rise gradually: 3% in 2027/28 and 4% in 2028/29. Petrol and diesel rates remain broadly stable. Choosing an EV now locks in low BIK rates for the term of your lease.

Does my employer also pay NI on my company car?

Yes. Your employer pays Class 1A National Insurance at 15% on the BIK value of each company car. This is calculated on the same P11D value and BIK rate that determine your income tax. For the petrol example above (BIK £9,800), the employer pays £9,800 × 15% = £1,470 per year in Class 1A NI.

What happens if I return my company car mid-year?

Your BIK is pro-rated for the days the car was available to you in the tax year. If you return the car on 30 September, you are liable for BIK for approximately 183 days (half the tax year). Your employer adjusts this via PAYE, and HMRC will reconcile via P11D submitted after 5 April.

Can I claim mileage allowance if I have a company car?

If your employer provides a company car, you cannot claim the HMRC approved mileage allowance (45p/25p per mile). However, if your employer pays a fuel card for all private mileage, an additional fuel benefit charge (Advisory Fuel Rate system) applies. You can repay private fuel use at the HMRC Advisory Fuel Rate to avoid the fuel benefit charge.

Are any cars exempt from company car tax?

Pool cars used by multiple employees for business purposes only, with no personal use, are exempt from BIK. Emergency vehicles and certain specialist vehicles may also qualify for exemption. A car used exclusively for business with no private use (including no home-to-office commuting) may also be exempt, but HMRC requires robust evidence of this.

These calculations are estimates based on 2026/27 HMRC and DVLA rates. Speak to a lender or qualified financial adviser for a personalised quote.