Company Car Tax (BIK) Calculator UK 2026/27
Calculate UK company car Benefit in Kind (BIK) tax liability using 2026/27 rates. Compare electric, hybrid, and combustion vehicles.
As an Amazon Associate and CJ Affiliate publisher we earn from qualifying purchases. Prices and availability may vary.
Company Car Tax (BIK) Guide 2026/27
How BIK is Calculated?
Company car tax (Benefit in Kind) is calculated as: BIK value = P11D price × BIK percentage band. Annual tax = BIK value × your marginal tax rate. P11D price: manufacturer's list price including VAT, delivery, accessories (not road tax or first-registration fee). BIK percentage: set by HMRC, depends on CO₂ emissions and fuel type. Range from 2% (pure EV 2026/27) to 37% (high-emission petrol). The lower the emissions, the lower the tax — strong incentive built into the system. Note: 2026/27 rates are frozen for EVs at 2% but scheduled to rise gradually in future years, so check the current year's rate before making a long-term leasing decision.
Why EVs Dominate Company Car Choice?
Pure EV 2026/27 BIK: 2%. Plug-in hybrid PHEV (>130 mile electric range): 2%. PHEV (70-129 miles): 5%. PHEV (40-69 miles): 8%. PHEV (30-39 miles): 12%. PHEV (under 30 miles): higher rates. Combustion petrol/diesel: 15-37% depending on CO₂. Example comparison on £40,000 car: BMW 330e PHEV (38 mile range, ~30g/km): 12% BIK = £4,800/year. Higher-rate tax = £1,920/year. Tesla Model 3 (0g/km EV): 2% BIK = £800/year. Higher-rate tax = £320/year. BMW 330i petrol (160g/km): 37% BIK = £14,800/year. Higher-rate tax = £5,920/year — nearly £5,600/year more than the equivalent EV, which is why EVs have become the default company car choice wherever a suitable model exists.
What do I need to know about Diesel Surcharge Details?
Diesel cars have additional 4% surcharge on BIK rate UNLESS they meet RDE2 (Real Driving Emissions Step 2) standard. Most diesels manufactured from January 2020: RDE2 compliant by default. Cars from 2018-2019: may or may not be — check manufacturer specs. Pre-2018 diesels: typically pre-RDE2 (surcharge applies). RDE2 is about real-world (not lab) NOx emissions, not just CO₂. The surcharge is capped at maximum 37% total BIK. Diesel hybrid: not affected by the surcharge, as it's classed as a separate fuel type and taxed on its own emissions rating instead.
What should I know about Fuel Benefit and Other Considerations?
Fuel benefit: if employer pays private mileage fuel for company car, additional BIK charge applies. 2026/27: multiplier £27,800 × BIK percentage. EV: no fuel benefit charge applies (electricity for charging not classed as fuel). Big advantage for EV company car drivers. Practical considerations: company car policy: not all employers offer all vehicles. Many have approved lists. Alternative: cash allowance + buy own car. Calculate tax on cash allowance vs BIK. Often (especially with EVs) BIK wins financially over a cash allowance, but always run both numbers for your specific tax band and mileage before deciding.