Answers · UK 2025/26

How much benefit-in-kind tax do I pay on a £40,000 petrol company car in 2026/27?

For a £40,000 petrol car with a typical benefit-in-kind rate of around 30%, the taxable benefit is about £12,000. A basic-rate taxpayer pays 20% (about £2,400 a year) and a higher-rate taxpayer pays 40% (about £4,800 a year), depending on the car's exact CO2 emissions.

Last updated: 7 June 2026Last reviewed: 7 June 2026How we verify

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Company car tax is charged on a benefit-in-kind value, which is the car's list price (the P11D value) multiplied by an appropriate percentage set by the car's CO2 emissions. A typical mid-range petrol car emitting around 130 to 150 g/km of CO2 attracts a benefit-in-kind percentage of roughly 30% to 35% for 2026/27, with higher-emission cars reaching up to 37% and a 4% diesel surcharge applying to non-RDE2 diesels. Taking a £40,000 petrol car with a 30% rate, the taxable benefit is about £12,000 a year. You then pay Income Tax on that benefit at your marginal rate: a basic-rate taxpayer pays 20% of £12,000, which is about £2,400 a year, and a higher-rate taxpayer pays 40%, which is about £4,800 a year. The benefit is reported on a P11D and usually collected by adjusting your tax code, so you see it as a smaller monthly pay packet. Your employer also pays Class 1A National Insurance at 15% on the £12,000 benefit, costing them about £1,800. If the employer also provides free fuel for private journeys, a separate and often expensive car fuel benefit is added, which can wipe out the value of the perk for low private mileage. The contrast with electric cars is stark: an electric company car has a benefit-in-kind rate of just 4% for 2026/27, so a £40,000 EV is taxed on only £1,600. Use the take-home pay or company car calculator to model the benefit and tax.