Company Car Tax (Benefit in Kind) Calculator UK 2025/26
If your employer provides a company car, you pay income tax on the Benefit in Kind (BiK) — the taxable value HMRC assigns to the benefit. For electric vehicles, the BiK rate is just 3% in 2025/26, making them extremely tax-efficient compared to petrol or diesel cars. This calculator shows exactly what you will pay and whether a car allowance might be better value.
BiK rates 2025/26: electric 3%, hybrid varies by zero-emission range. Diesel cars attract a 4% surcharge on top of CO2-based rate (unless RDE2 compliant). Fuel benefit multiplier: £27,800. Employer also pays Class 1A NI at 13.8% on the P11D value. BiK rates for EVs rise to 4% (2026/27) and 5% (2027/28).
BiK Rates by CO2 Emissions 2025/26
| CO2 (g/km) | Petrol BiK% | Diesel BiK% (non-RDE2) |
|---|---|---|
| 0 (electric) | 3% | N/A |
| 1–50 (PHEV: <30 mile EV range) | 14% | 18% |
| 1–50 (PHEV: 30–39 mile EV range) | 12% | 16% |
| 51–75 | 17% | 21% |
| 76–100 | 20% | 24% |
| 101–125 | 23% | 27% |
| 126–150 | 26% | 30% |
| 151–175 | 29% | 33% |
| 176–200 | 32% | 36% |
| 201–225 | 35% | 37% |
| 226+ | 37% | 37% |
Is an Electric Company Car Worth It?
At 3% BiK in 2025/26, electric company cars are one of the most tax-efficient benefits available. A £50,000 Tesla Model 3, for example, generates a taxable benefit of just £1,500/year. A higher-rate taxpayer pays just £600/year in income tax — less than £50/month. Compare this with a petrol equivalent at £50,000 and 150g/km CO2: the BiK would be 26%, generating £13,000/year in taxable benefit and £5,200/year income tax. The saving is extraordinary.
Even as BiK rates for EVs rise (3% → 4% → 5% over the next three years), they remain vastly more tax-efficient than petrol or diesel vehicles with equivalent values. Combined with reduced running costs (home charging vs petrol) and salary sacrifice schemes, EVs represent excellent value as company cars.
Salary Sacrifice for Company Cars
Salary sacrifice car schemes (also called “EV salary sacrifice”) allow employees to sacrifice gross salary in exchange for a company car. This reduces your taxable income and National Insurance contributions. For EVs with 3% BiK, the tax saving on both the reduced salary and the low BiK can make the effective cost of running a new electric car far lower than buying or leasing one privately. Check with your employer’s HR team whether a salary sacrifice scheme is available.
Frequently Asked Questions
A P11D is a form employers submit to HMRC each year showing the value of benefits provided to employees, including company cars. The P11D value of your car (its list price including options) is used to calculate your BiK taxable benefit. HMRC adjusts your tax code to collect the BiK tax through PAYE. You should receive a P11D or P11D(b) notification each year showing the taxable benefit applied.
As an employee, you do not pay employee NI on company car BiK — it is taxed through income tax only. However, your employer pays Class 1A National Insurance at 13.8% on the P11D value of your car. This is a cost to the employer, not you. Salary sacrifice schemes can reduce this cost for the employer, which is why many employers are willing to offer them.