Company car tax calculator: work out your BIK in 20 seconds.

7 min read · 18 February 2026. The calculator above works out company car tax for any vehicle: enter the P11D value, fuel type, CO₂ and your tax band, and it returns the indicative monthly Benefit-in-Kind, the employer Class 1A National Insurance and the full rate trajectory to 2029/30. It covers electric, plug-in hybrid, petrol and diesel. The guide below explains what the numbers mean: how BIK is calculated end to end, what the announced rates do through the rest of the decade, and why an electric company car still lands a 40% taxpayer roughly £640 a year against £5,900 for the equivalent diesel.

What BIK actually is

Benefit-in-Kind (BIK) is the income tax an employee pays on the value of a non-cash benefit provided by their employer. A company car is the most common BIK in the UK; medical insurance, gym membership and accommodation are others. The principle is that anything an employer gives an employee that has cash-equivalent value is taxable.

For company cars, HMRC sets a BIK percentage rate against each vehicle, derived from CO₂ emissions, fuel type and electric range. The percentage is applied to the vehicle's P11D value — list price plus options and delivery, minus a small set of allowances — to produce the taxable benefit. The driver pays income tax on that benefit at their marginal rate (20%, 40% or 45%). The employer separately pays Class 1A National Insurance on the same taxable value (currently 15%).

The 2026/27 rate: 4%

For the 2026/27 UK tax year (running 6 April 2026 to 5 April 2027), the BIK rate on a fully electric company car is 4%. This applies to any car with zero tailpipe CO₂ emissions — battery electric vehicles, in practice. The rate was 3% in 2025/26, which is still the figure that applies to a lease modelled on that year.

The arithmetic on a typical EV company car works out cleanly. A £40,000 P11D-value EV at 4% BIK produces a taxable benefit of £1,600. A 40% rate taxpayer pays £640 of income tax on that benefit per year. A 20% rate taxpayer pays £320. The employer's Class 1A NIC on £1,600 at 15% is £240.

The same £40,000 vehicle as a high-emission diesel at 37% BIK produces a taxable benefit of £14,800. A 40% rate driver pays £5,920 in BIK income tax per year. The employer's Class 1A NIC is over £2,000.

The gap — £5,280 of personal tax saving for the higher-rate driver — is large enough to be the deciding factor in most company-car selections in the UK in 2026.

The announced trajectory: 4%, 5%, 7%, 9%

The EV BIK rate is rising on a pre-announced schedule:

2025/26: 3%
2026/27: 4%
2027/28: 5%
2028/29: 7%
2029/30: 9%

The gradient is not a flat 1% per year. It holds at 1% to 2027/28, then steepens: 7% in 2028/29 and 9% in 2029/30 are legislated, not projected. That is a 125% rise on the 2026/27 rate across four years, and it is the reason a car ordered today is taxed very differently in year four than in year one. Even at 9%, EV BIK stays dramatically lower than ICE, and the ICE rates are not falling, so the gap is structurally durable. But cheaper than diesel and fixed in cost are different promises. We set out the full four-year arithmetic in the four-year BIK cliff.

Fleets and drivers signing 3 to 4 year contracts in 2026 are signing into the BIK regime that will apply across the contract, so the rate the driver pays in year four is already known when they sign in year one. That predictability cuts both ways. The cost is calculable and stays lower than ICE across the contract horizon, but it is not flat, and a four-year cycle signed today runs directly into the 7% and 9% years.

How the company car tax calculator works

The calculator at the top of this page runs the same arithmetic HMRC applies, so it is worth knowing what sits behind the number it returns. The full BIK calculation has six inputs:

1. P11D value: manufacturer list price + factory options + delivery + first registration fee, minus the £80 first registration fee in some cases, minus a £4,000 capital contribution if the driver pays one.
2. BIK percentage: set by HMRC against fuel type, CO₂ and electric range. 4% for BEVs in 2026/27.
3. Taxable benefit (annual): P11D × BIK%.
4. Driver income tax: Taxable benefit × driver's marginal rate (20% / 40% / 45%).
5. Employer NIC: Taxable benefit × Class 1A rate (15%).
6. Fuel benefit: a separate BIK on private fuel paid by the employer; not relevant for pure BEVs since electricity is treated differently.

The result is typically reported as monthly take-home cost to the driver and as an annual NIC line in the employer's payroll cost.

EV vs PHEV vs diesel BIK

The BIK regime is differentiated by powertrain, and the differences are large enough to drive selection.

BEV (battery electric): 4% in 2026/27.
PHEV (plug-in hybrid): 5% to 12%, depending on electric-only range. The lowest PHEV band (130+ miles of pure-electric range) attracts 5%, falling to 12% for shorter electric ranges. Most PHEVs available in the UK fleet market sit in the 8–12% band.
Diesel: 25% to 37%, depending on CO₂. A typical fleet diesel sits around 30%.
Petrol (non-hybrid): typically 24% to 37%, with a similar shape.

The differential between BEV (4%) and even the cleanest PHEV (5%) is large enough that the BIK alone has shifted the company car market structurally toward BEVs. The implications of that shift — supply, residuals, charging infrastructure — are the operational story of UK fleet planning right now.

Why low BIK is driving EV adoption

BIK has done more for UK EV adoption than any direct subsidy. The Plug-in Car Grant ended in 2022; the BIK gap is what replaced it as the structural incentive — and it is more durable than a grant because it sits in the tax code rather than a discretionary spending line.

For employees, the choice between a £40,000 EV at 4% BIK and a £40,000 diesel at 30% BIK is a £4,160-per-year personal tax decision. Multiplied across a higher-rate-taxpayer's marginal income, that compounds materially over a career. Fleet managers report that the EV is now the only company car most drivers are interested in — which simplifies the operational planning even as it tightens the supply.

For employers, the Class 1A NIC saving on the same vehicle is over £1,500 per year per driver — material across a fleet of any size. A 100-vehicle fleet running EVs against the same fleet running diesels saves the employer roughly £156,000 per year in Class 1A NIC alone, before considering the operating-cost differences in our complete EV transition guide.

The salary sacrifice advantage

For employees who do not have a company car as a benefit and would otherwise lease privately, salary sacrifice on an EV stacks the BIK advantage on top of gross-deduction tax efficiency. The lease cost is deducted from gross pay before income tax and National Insurance are calculated; the resulting BIK is at the 4% EV rate; the employer's Class 1A NIC is on the BIK value, not the gross deduction.

The combined effect is typically a 30–40% saving against the equivalent post-tax cost of a private lease. The advantage is largest for higher-rate taxpayers, where the gross-deduction NI saving is at 2% rather than 8%, but the BIK and income-tax saving is largest. Our Perx programme extends the salary sacrifice principle to home chargers, solar and battery storage — the entire EV ownership package, deducted gross.

What fleet managers should do with this

The BIK landscape has been stable in shape — EV materially cheaper than ICE — for several years and is signalled to remain so. Three operational implications follow.

Quote BIK in the company-car offer. Drivers compare lease rates; fleet managers see total cost. The BIK number on the driver's payslip is what closes the decision and is the same number every month. You can model that figure on the 2026/27 position in about 20 seconds with the company-car BIK calculator above: set the fuel type, P11D, tax band and year, and it returns the indicative monthly BIK with the employer Class 1A NI and the rate trajectory to 2029/30 built in.

Use BIK savings to fund the transition. The employer's Class 1A NIC saving on the EV vs the diesel is real money. Some fleets explicitly use it to subsidise home charger installation for drivers, accelerating the operational viability of the transition.

Measure real cost. The BIK saving is one part of the EV economics. The other is real charging cost per mile against real fuel cost per mile — which most fleets get wrong because they use generic figures rather than their own data. The same data layer that surfaced the EV reimbursement gap is the one a serious fleet runs the BIK + TCO comparison on. An OEM-native fleet intelligence platform connects to vehicle telemetry to surface real per-mile cost continuously.

Frequently asked questions

What is the BIK rate for electric cars in 2026?

For the 2026/27 UK tax year, the BIK rate on a fully electric company car is 4% of the vehicle's P11D value, up from 3% in 2025/26. The legislated trajectory then runs 5% for 2027/28, 7% for 2028/29 and 9% for 2029/30. By comparison, the highest-emission diesel cars sit at 37%, with most ICE company cars in the 25–35% range. The gap is the largest single driver of EV company car uptake in the UK.

How is company car BIK tax calculated?

Company car BIK tax is calculated as the vehicle's P11D value (essentially list price plus options and delivery) multiplied by the BIK percentage rate set by HMRC for that vehicle, multiplied by the employee's marginal income tax rate. The employer separately pays Class 1A National Insurance Contributions (NIC) on the same taxable value. For a £40,000 EV at 4% BIK with a 40% rate driver, the employee tax is roughly £640 per year and the employer Class 1A NIC is £240.

Will electric car BIK rates increase?

Yes, and the rise is steeper than it first appears. The published rates are 4% in 2026/27, 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30. Those are legislated rates, not projections, and they represent a 125% rise across four years rather than a flat 1% per year. The gap to ICE BIK rates remains substantial throughout, so EVs stay dramatically cheaper on tax, but a car ordered on a four-year cycle today is taxed at more than twice the rate by the end of it. That makes how the car is funded matter as much as which car is chosen.

Is salary sacrifice better than a company car allowance for EVs?

For most UK employees with a need for a vehicle, salary sacrifice on an EV is more tax-efficient than taking a company car allowance and buying or leasing privately. The salary sacrifice arrangement deducts gross pay before income tax and National Insurance, and the resulting BIK on a fully electric car is only 4% in 2026/27. The combined effect is typically a 30–40% saving against the equivalent post-tax cost of a private lease. Schemes like Perx extend the salary sacrifice principle to home chargers, solar and battery storage.

What is eVED and when does it start?

Electric Vehicle Excise Duty (eVED) is a new pay-per-mile road tax for electric vehicles, announced in the UK Autumn Budget 2025 and taking effect from April 2028. Battery electric vehicles (BEV) will pay 3p per mile and plug-in hybrids (PHEV) will pay 1.5p per mile, in addition to the standard flat-rate VED. On 10,000 miles a year that is roughly £300 for a BEV or £150 for a PHEV. Standard hybrids and petrol/diesel vehicles are not subject to eVED.

HMRC BIK rates 2025/26 to 2029/30

The UK Autumn Budget 2025 confirmed the company-car Benefit-in-Kind appropriate-percentage rates through 2029/30. The table below shows the typical band for each fuel type — most sites only publish the current year, so these forward figures are the ones to plan a 3–4 year contract against.

Source: UK Autumn Budget 2025, HMRC confirmed rates. BIK rates for petrol/diesel vehicles vary with exact CO₂ emissions — the figures above show the most common band, and lower-emission cars sit below it. The calculator above uses your exact CO₂ and electric range; this table shows the typical band for each fuel type.

Note the PHEV cliff edge: plug-in hybrids jump from 8% to 18% in 2028/29. Anyone signing a four-year PHEV lease now will see their monthly BIK more than double mid-contract — a critical input for procurement decisions being made today.

From April 2028, eVED (Electric Vehicle Excise Duty — a pay-per-mile road tax) also applies: 3p/mile for BEVs and 1.5p/mile for PHEVs, on top of the standard flat VED. On 10,000 miles a year that is roughly £300 for a BEV or £150 for a PHEV. The calculator estimates this for you from 2028/29.