Company Car Tax Calculator 2026/27
A company car is a taxable benefit. Enter its P11D value, CO2 emissions and fuel type to see the benefit-in-kind percentage, the taxable benefit and the tax you'll pay in 2026/27.
Last updated 4 July 2026 · Written and reviewed by Mustafa Bilgic
Company car tax calculator
Benefit-in-kind tax on a company car, 2026/27.
2026/27 appropriate percentages. Confirm your car's figures with the manufacturer and GOV.UK.
How company car tax works
A company car you can use privately is a benefit in kind (BIK), so you pay income tax on its value. The taxable benefit is the car's P11D value (roughly the list price including VAT and delivery, minus any capital contribution) multiplied by an appropriate percentage set by its CO2 emissions. You then pay tax on that benefit at your income tax rate. Cleaner cars carry lower percentages, which is why an electric car is taxed so lightly.
A £40,000 electric car has a 4% benefit for 2026/27 — a £1,600 taxable benefit. A higher-rate (40%) taxpayer pays £640 a year. A £35,000 petrol emitting 130 g/km has a 32% benefit (£11,200), costing the same taxpayer about £4,480 a year.
2026/27 benefit-in-kind percentages
The appropriate percentage rises with emissions. Fully electric cars are 4% for 2026/27 (up from 3%). Plug-in hybrids emitting 1–50 g/km are banded by their electric-only range, and petrol cars above 50 g/km climb one percentage point per 5 g/km up to a 37% maximum. Non-RDE2 diesels add a 4% surcharge, also capped at 37%.
| CO2 / type | 2026/27 BIK % |
|---|---|
| 0 g/km (electric) | 4% |
| 1–50 g/km, 130+ mile range | 5% |
| 1–50 g/km, 40–69 mile range | 12% |
| 1–50 g/km, under 30 miles | 15% |
| 55 g/km | 17% |
| 100 g/km | 26% |
| 160 g/km and above | 37% (max) |
Add 4% for non-RDE2 diesels, capped at 37%.
Why electric company cars win
The gap between a 4% electric benefit and a 30%-plus petrol benefit is enormous, and it's the single biggest driver of the salary-sacrifice EV schemes many employers now run. Because the benefit is so low, sacrificing salary for an electric car can be far cheaper than buying one personally — the tax saving does much of the work. Our salary sacrifice calculator shows the income-tax and NI side, and the EV charging cost calculator covers the running costs.
Fuel benefit and vans
If your employer also pays for private fuel, there's a separate fuel benefit charge based on a fixed multiplier and the same BIK percentage — often not worth it unless you do very high private mileage. Vans are taxed differently, on a flat benefit figure rather than a percentage of value, with electric vans currently at a nil benefit. This calculator covers cars; check van rules and the exact fuel benefit multiplier on GOV.UK.
How you actually pay it
Company car tax is usually collected by adjusting your tax code, so it comes out of your salary through PAYE across the year rather than in a lump sum — which is why a company car often produces a K code or a lower number on your code. Our tax code calculator decodes the result, and your take-home pay falls by the tax shown here spread over twelve months.
Frequently asked questions
How is company car tax calculated?
Multiply the car's P11D value by its benefit-in-kind percentage (set by CO2 emissions) to get the taxable benefit, then multiply by your income tax rate. For example, a £30,000 car with a 25% benefit gives a £7,500 benefit, costing a 20% taxpayer £1,500 a year.
What is the company car tax rate for electric cars in 2026/27?
Fully electric cars have a benefit-in-kind rate of 4% for 2026/27, up from 3% the previous year. On a £40,000 electric car that's a £1,600 taxable benefit — £320 a year for a basic-rate taxpayer or £640 for a higher-rate taxpayer.
What is a P11D value?
The P11D value is broadly the car's list price including VAT, delivery and factory options, minus any one-off capital contribution you make. It's the figure the benefit-in-kind percentage is applied to — usually a little more than the on-the-road price.
Why is a diesel company car taxed more?
Diesel cars that don't meet the RDE2 (Euro 6d) emissions standard carry a 4% surcharge on top of the normal percentage, capped at the 37% maximum. RDE2-compliant diesels are treated like petrol cars with no surcharge.
How do I pay company car tax?
It's normally collected through your tax code, so the tax is spread across the year and deducted from your salary via PAYE. Adding a company car typically lowers your tax code number or produces a K code, reducing your monthly take-home pay.