Glossary · UK
What is Company Car Tax (BIK Rate)?
The percentage of a car's list price used to calculate the taxable Benefit-in-Kind for a company car.
Full Definition
The Benefit-in-Kind (BIK) rate for a company car is a percentage of the car's P11D (list) price, set mainly by its CO2 emissions and, for the lowest-emission cars, its electric range, which is then multiplied by the employee's marginal tax rate to work out the annual tax charge. Electric and very low-emission cars sit on much lower BIK percentages than petrol or diesel equivalents, which is the main reason EV salary sacrifice and electric company cars have become so tax-efficient; rates are set out in HMRC company car tax tables and are reviewed for future tax years in each Budget.
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Disclaimer: Definitions are for guidance only. For decisions about your tax, savings, property or pension situation, always consult a qualified professional or refer to gov.uk.