Answers · UK 2025/26
How is company car tax (BIK) calculated in the UK 2025/26?
Benefit-in-Kind (BIK) tax on a company car = list price × BIK percentage × your Income Tax rate. BIK % depends on CO₂ emissions and fuel type. Electric cars are 3% in 2025/26, rising to 5% in 2027/28; petrol/diesel range 15–37%.
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UK company car Benefit-in-Kind (BIK) tax for 2025/26 is calculated as: list price (P11D value) × BIK % × your marginal Income Tax rate. The BIK % depends on CO₂ emissions and fuel type. Battery-electric vehicles (BEV) are taxed at 3% in 2025/26, 4% in 2026/27, 5% in 2027/28 (rates frozen by Autumn 2022 Budget). Plug-in hybrids (PHEVs) range 3–21% depending on electric-only range. Petrol/diesel: starts around 15% at low CO₂ and rises to 37% at 170g/km+. Diesel adds 4% surcharge unless it meets RDE2 emissions. Example: a £40,000 Tesla Model 3 at 3% = £1,200 taxable benefit. A 40% taxpayer pays £480/year tax. The same employee in a £40,000 petrol BMW 3-series (130g/km, 31% band) = £12,400 benefit, costing £4,960/year tax — 10× higher. Employer also pays Class 1A NI at 15% on the benefit. Fuel benefit (£28,200 multiplier) adds further tax if employer pays for private fuel.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.