Company Car Tax Calculator (2026/27 BIK)

Use the company car tax calculator

Enter the car's P11D value, its appropriate percentage (driven by CO2 emissions and, for electric and hybrid cars, the electric range) and your income tax rate. The tool above returns your annual taxable benefit and the tax you'll pay. Read on to see how each part of that sum works, with worked examples you can check against your own car.

How company car tax is worked out

A company car you can use privately is a taxable perk, so HMRC taxes it as a Benefit-in-Kind. You don't pay tax on the car's full price. Instead you pay income tax on a slice of its value each year, and the size of that slice depends on how polluting the car is.

The formula has two steps. First, find the taxable benefit:

Taxable benefit (BIK) = P11D value × appropriate percentage

Then turn that benefit into tax using your own marginal income tax rate:

Company car tax = taxable benefit × your income tax rate

The P11D value is the car's list price including VAT, delivery and most factory options, plus accessories — not the discounted price your employer actually paid. The appropriate percentage is set by HMRC from the car's CO2 emissions; the cleaner the car, the lower the percentage, with fully electric cars sitting far below petrol and diesel models. You can look up the exact percentage for your car's CO2 figure on the gov.uk company car tax guidance; the calculator and examples here apply whichever percentage you enter.

The tax itself follows the normal income tax bands. A basic-rate employee pays 20% on the benefit, a higher-rate employee 40%, and an additional-rate employee 45%. The benefit sits on top of your salary, so if it pushes part of your income into the next band, that part is taxed at the higher rate. To see where your salary leaves you before the car is added, run your figures through our income tax calculator.

Two extra points matter. If your employer also pays for private fuel, there's a separate fuel benefit charge on top — often poor value unless you do heavy private mileage. And National Insurance: you don't pay employee NI on the car benefit, but your employer pays Class 1A NI on it, which is why some firms restrict their car lists.

Worked examples you can check

Example 1 — a petrol car for a higher-rate driver

Priya is a project manager earning £60,000, so she's a higher-rate taxpayer. Her company car has a P11D value of £30,000. She looks up the CO2 figure and the appropriate percentage for her car is 29% (use your own car's figure here).

• Taxable benefit = £30,000 × 29% = £8,700
• Company car tax = £8,700 × 40% = £3,480 a year
• That's about £290 a month off her take-home pay, usually collected through an adjusted tax code.

If Priya were a basic-rate taxpayer instead, the same £8,700 benefit would cost £8,700 × 20% = £1,740 a year (£145 a month). Same car, very different bill — which is why your tax rate matters as much as the car.

Example 2 — switching to an electric car

Tom is offered an electric car with a P11D value of £40,000 and a low appropriate percentage of 3% (again, confirm your car's exact figure on gov.uk). He's a higher-rate taxpayer.

• Taxable benefit = £40,000 × 3% = £1,200
• Company car tax = £1,200 × 40% = £480 a year, around £40 a month.

A more expensive car, yet roughly one-seventh of Priya's tax bill. That gap is the whole reason electric company cars and salary sacrifice car schemes have become so popular — the low BIK on EVs makes them cheap to run as a benefit. If you want to estimate the running cost too, the EV charging cost calculator covers the electricity side.

Example 3 — the Scottish difference

Scotland sets its own income tax bands. Take Priya's £8,700 benefit again, but assume she lives in Scotland and the benefit falls in the Scottish higher rate of 42%:

• Company car tax = £8,700 × 42% = £3,654 a year

That's £174 more than the £3,480 an equivalent driver pays in England, Wales or Northern Ireland — because Scottish income tax rates are higher in the middle bands. A Scottish advanced-rate driver would pay 45% on the benefit. Check your position with the Scotland tax calculator if you're north of the border.

2026/27 income tax rates used in the calculation

The benefit itself comes from your car's P11D value and appropriate percentage. The tax on that benefit uses these income tax rates for 2026/27 (England, Wales and Northern Ireland), confirmed against gov.uk:

Scotland uses different bands — the relevant company car rates there are typically 21%, 42%, 45% or 48% depending on your total income. Source: gov.uk income tax rates. Always confirm your car's appropriate percentage on the gov.uk company car tax rules before relying on a figure.

How to bring your company car tax down

• Go electric or low-emission. The appropriate percentage drops sharply for zero and low-emission cars, which is where the real saving sits — Example 2 shows the scale of it.
• Watch the P11D value, not the deal price. A car with a lower list price and fewer pricey options has a lower benefit, even if your employer negotiated a discount on a dearer model.
• Make a capital contribution. Paying a lump sum towards the car (up to £5,000) reduces the P11D value the benefit is based on.
• Decline free private fuel unless your private mileage is genuinely high — the separate fuel benefit charge often costs more than buying your own fuel.
• Compare against a cash allowance. If you take cash instead and use your own car for work, you can claim approved mileage allowance payments at HMRC rates. Sometimes that beats a company car, sometimes it doesn't.

Common mistakes to avoid

• Using the price your employer paid. BIK is based on the full P11D list price including options, VAT and delivery — discounts don't reduce it.
• Forgetting the benefit pushes you up a band. If your salary is just under £50,270, the car benefit can tip part of your income into the 40% bracket, so don't assume it's all taxed at 20%.
• Ignoring the tax code change. HMRC usually collects company car tax by reducing your tax code, so your monthly net pay falls — check your code is right or you could over- or under-pay.
• Mixing up the fuel benefit. The car benefit and the private-fuel benefit are two separate charges; people often quote one and forget the other.
• Applying England's rates in Scotland. Scottish taxpayers use Scottish bands, so the same car can cost noticeably more, as Example 3 shows.

For wider context on how perks and benefits are taxed, MoneyHelper's free guidance is a useful, impartial starting point.

These figures are estimates for guidance only and not personal tax or financial advice. Confirm your car's appropriate percentage and your tax position with gov.uk or a qualified adviser before making a decision.

Related calculators

Plan the whole picture with our take-home pay calculator, weigh a car scheme against your pay with the salary sacrifice calculator, and if you're a director comparing reward routes, try the dividend vs salary calculator.