A company car is a taxable perk. Enter the car's P11D value, its Benefit-in-Kind band and your tax rate to see the annual company car tax — and why an electric vehicle can cost a fraction of a petrol one to run.
Benefit-in-Kind · annual cost
The taxman treats a company car you can use privately as a Benefit-in-Kind (BiK). The taxable value is the car's P11D value (list price plus options) multiplied by a percentage set by its CO2 emissions. You then pay Income Tax on that benefit at your usual rate.
| Car type | Typical BiK band 2026/27 |
|---|---|
| Fully electric (0g/km) | ~3% |
| Plug-in hybrid (low CO2) | 5–14% |
| Efficient petrol | 20–28% |
| Higher-emission diesel | 30–37% |
If your employer also pays for private fuel, a separate fuel benefit charge applies, which can wipe out the perk unless you do very high mileage. There's no fuel benefit on electricity for EVs. Weigh the car against taking the cash and buying your own — model your wider pay on the take-home pay calculator and your marginal rate on the income tax calculator.
P11D value × BiK percentage × your tax rate. A £40,000 car at a 25% band gives a £10,000 taxable benefit; a 40% taxpayer pays £4,000 a year.
EVs have near-zero CO2, so their BiK band is tiny — around 3% for 2026/27 — making them far cheaper to tax than petrol or diesel.
The car's list price including VAT, delivery and options, but excluding the registration fee and road tax. It's the base figure for the BiK calculation.
Yes, if your employer pays for private petrol or diesel a separate fuel benefit charge applies. There's no fuel benefit on electricity for EVs.
