Company Car Tax Calculator UK (2026/27)
Company car tax is calculated by multiplying your car’s P11D manufacturer list price by its official Benefit-in-Kind (BIK) percentage and your marginal income tax rate (20%, 40%, or 45%). In 2026/27, pure electric vehicles (0 g/km CO2) attract a low 4% BIK rate — on a £40,000 EV, a 40% higher-rate taxpayer pays just £640.00 a year (£53.33 monthly). Standard petrol and diesel cars range up to 37% BIK, with non-RDE2 diesels paying a 4 percentage point surcharge.
Key 2026/27 Statutory Facts
- Pure electric cars (0 g/km) incur a 4% BIK rate in 2026/27 (rising 1% annually through 2029/30). [Source: GOV.UK]
- Plug-in hybrids (1–50 g/km) have BIK rates from 4% (130+ miles range) to 16% (under 30 miles range). [Source: GOV.UK]
- Standard petrol and RDE2 diesel cars start at 17% for 51–54 g/km and increase by 1% per 5 g/km up to 37% max. [Source: GOV.UK]
- Non-RDE2 diesel cars incur a 4 percentage point surcharge up to the statutory maximum of 37%. [Source: GOV.UK]
- Employer Class 1A National Insurance on company cars is charged at 15.0% on the taxable BIK value. [Source: GOV.UK]
How Company Car Tax (Benefit-in-Kind) is Calculated in 2026/27
Company car tax is charged when an employer provides a vehicle for an employee’s private use (including commuting). The tax liability depends on three factors: the vehicle’s official P11D value, its CO2-based Benefit-in-Kind (BIK) percentage, and your personal marginal income tax rate.
Annual Company Car Tax = P11D Value × BIK Percentage × Marginal Income Tax Rate
| Vehicle Type / CO2 Tier | 2026/27 BIK % | Annual Tax on £35k Car (20% Basic) | Annual Tax on £35k Car (40% Higher) |
|---|---|---|---|
| Pure Electric (0 g/km CO2) | 4% | £280.00 (£23.33/mo) | £560.00 (£46.67/mo) |
| Hybrid 1–50 g/km (130+ miles range) | 4% | £280.00 | £560.00 |
| Hybrid 1–50 g/km (70–129 miles range) | 7% | £490.00 | £980.00 |
| Hybrid 1–50 g/km (40–69 miles range) | 10% | £700.00 | £1,400.00 |
| Petrol 100–104 g/km | 27% | £1,890.00 | £3,780.00 |
| Petrol 120–124 g/km | 31% | £2,170.00 | £4,340.00 |
| Non-RDE2 Diesel 120–124 g/km (+4% surcharge) | 35% | £2,450.00 | £4,900.00 |
| Maximum BIK Cap (Any car over 150g/km) | 37% | £2,590.00 | £5,180.00 |
Worked Examples: 2026/27 BIK Tax Scenarios
- Electric Vehicle (£40,000 P11D, 40% Taxpayer): 4% BIK = £1,600 taxable benefit. Annual tax = £640.00 (£53.33/month). Employer Class 1A NI = £240.00.
- Petrol 120g/km (£30,000 P11D, 40% Taxpayer): 31% BIK = £9,300 taxable benefit. Annual tax = £3,720.00 (£310.00/month). Employer Class 1A NI = £1,395.00.
- Non-RDE2 Diesel 120g/km (£30,000 P11D, 40% Taxpayer): 31% + 4% diesel surcharge = 35% BIK = £10,500 taxable benefit. Annual tax = £4,200.00 (£350.00/month). Employer Class 1A NI = £1,575.00.
Electric Vehicle Salary Sacrifice: Why EV Company Cars Dominate
Because pure electric cars attract only a 4% BIK rate in 2026/27, taking an electric vehicle through an employer salary sacrifice scheme is one of the most tax-efficient benefits in the UK. By exchanging gross salary before tax, an employee earning £60,000 saves 40% Higher Rate Income Tax and 2% National Insurance, paying only 4% BIK on the car — effectively saving 38% to 42% compared to personal financing or PCP.
Calculate how much gross salary sacrifice reduces your net pay using our Salary Sacrifice Pension & Benefits Calculator, or verify annual road tax with the Car Tax (VED) Calculator.
Official Reference: HMRC Company Car Benefit-in-Kind tables for 2026/27. Income Tax (Earnings and Pensions) Act 2003, Part 3, Chapter 6.
Methodology & Assumptions
Our 2026/27 calculations strictly apply primary legislation published by HM Revenue & Customs. Specific assumptions include:
- Calculations reflect the 2026/27 tax year (6 April 2026 to 5 April 2027).
- Standard tax codes 1257L (England, Wales, NI) and S1257L (Scotland) are assumed unless adjusted.
- Class 1 National Insurance thresholds are annualized; in actual UK payroll, NI is assessed on a non-cumulative pay-period basis.
- Special allowances such as Blind Person’s Allowance (£3,070) or Marriage Allowance (£1,260) are excluded from baseline calculations unless selected.
Frequently Asked Questions (2026/27)
How is company car tax calculated in the UK for 2026/27?
Company car tax equals: P11D Value × BIK Percentage × Marginal Income Tax Rate. The P11D value is the manufacturer list price plus VAT, options, and delivery (excluding first-year VED). The BIK percentage (4% to 37%) is determined by official CO2 emissions and electric range. Your employer reports this to HMRC, and tax is deducted monthly from your salary via an adjustment to your PAYE tax code.
What is the company car tax rate for electric cars in 2026/27?
For the 2026/27 tax year, the Benefit-in-Kind rate for pure zero-emission electric vehicles (0 g/km CO2) is 4% (up from 3% in 2025/26). For example, on an electric car with a £40,000 P11D value, the taxable benefit is £1,600. A 20% basic-rate taxpayer pays £320.00/yr (£26.67/mo), and a 40% higher-rate taxpayer pays £640.00/yr (£53.33/mo).
What is the BIK rate on a petrol car emitting 120 g/km CO2?
In 2026/27, a petrol car emitting 120 g/km falls into the 31% BIK bracket. On a £30,000 P11D value, the taxable benefit is £9,300.00 per year. A 40% higher-rate taxpayer will pay £3,720.00 in annual company car tax (£310.00 per month).
What is the diesel surcharge for company car tax?
Diesel cars that do not meet Euro 6d (RDE2) emissions standards are subject to a 4 percentage point BIK surcharge, subject to an overall ceiling of 37%. For example, a non-RDE2 diesel emitting 120 g/km pays 35% BIK instead of 31%. RDE2-compliant diesels are exempt from this surcharge and pay standard rates.
What is the difference between P11D value and list price?
The P11D value is the official manufacturer list price including VAT, all factory-fitted optional extras, and standard delivery charges, but excluding the first-year Vehicle Excise Duty (road tax) and first registration fee. Even if your employer negotiated a fleet discount on purchase, company car tax is always calculated on the full un-discounted P11D value.
How does an electric car salary sacrifice scheme work?
In an electric car salary sacrifice arrangement, you exchange a portion of your pre-tax gross salary for a brand new EV. Because the deduction reduces your gross pay, you save Income Tax (20%, 40%, or 45%) and employee National Insurance (8% or 2%). You only pay Benefit-in-Kind tax at 4% on the vehicle in 2026/27, resulting in substantial savings compared to personal leasing.
How much Employer Class 1A National Insurance is due on company cars?
Employers pay Class 1A National Insurance on the taxable benefit of company cars provided to employees. In 2026/27, the employer secondary Class 1A rate is 15.0%. For a car with a £10,000 taxable benefit, the employer incurs £1,500.00 in Class 1A NIC.
What are the BIK rates for plug-in hybrid cars in 2026/27?
Plug-in hybrids emitting 1–50 g/km of CO2 are banded by electric-only zero-emission range: 130 miles or more (4%), 70–129 miles (7%), 40–69 miles (10%), 30–39 miles (14%), and less than 30 miles (16%).
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