UK Company Car BIK Calculator 2026/27
Calculate UK Benefit in Kind (BIK) tax on a company car for the 2026/27 tax year. Includes the new electric vehicle rate (3%), updated emissions bands, and personal tax owed at your marginal rate. Decide whether a company car or a cash allowance is the better deal.
| P11D Value | — |
| BIK Percentage (2026/27) | — |
| Annual Cash Equivalent (Benefit) | — |
| Fuel Benefit Charge | — |
| Total Taxable Benefit | — |
| Annual BIK Tax @ Marginal Rate | — |
| Monthly Cost (paid via PAYE) | — |
How UK Company Car BIK Tax Works in 2026/27
Benefit in Kind (BIK) is a tax on perks employers give employees, including a company car for personal use. The tax is calculated as: P11D value × BIK percentage × your marginal income tax rate. The BIK percentage depends on the car's CO₂ emissions and fuel type — pure electric vehicles enjoy the lowest rate at 3% in 2026/27, rising 1 percentage point each year through 2029/30 to incentivise EV uptake (source: gov.uk Spring Budget).
The 2026/27 EV rate of 3% means a £40,000 EV gives a £1,200 cash equivalent — only £480 in tax for a 40% taxpayer. Compare to a petrol car at 130g/km CO₂ (29% band) on the same £40,000 list price: £11,600 cash equivalent, £4,640 tax. The savings drove the EV transition for company-car drivers — though the gap narrows each year as EV rates rise.
2026/27 BIK Bands by CO₂ Emissions
For pure EV: 3%. For PHEV with electric range: 30+ miles = 5%, 40+ miles = 4%, 70+ miles = 3%, 130+ miles = 2%, 190+ miles = 2%. For petrol, diesel-RDE2, and other low-emission: bands start at 7% (1-50 g/km) and rise in 1% steps to 37% maximum at 160+ g/km. Diesel non-RDE2 cars get a 4% surcharge, capped at 37% (source: gov.uk company car rates).
Fuel Benefit Charge — Often Overlooked
If your employer pays for your private fuel (not just business mileage), you also owe tax on the fuel benefit. The 2026/27 fuel benefit multiplier is £27,800. Multiply by the same BIK percentage as your car, then by your marginal tax rate. Example: 29% BIK × £27,800 = £8,062 cash equivalent × 40% tax = £3,225 annual fuel benefit tax. This often makes employer-paid private fuel a bad deal unless you drive 18,000+ private miles per year.
Company Car vs Cash Allowance
Many employers offer a cash alternative ("car allowance"). The break-even depends on your tax band, the car's emissions, and your annual mileage. EVs strongly favour company car ownership; high-emission petrol cars favour cash allowance. Use this calculator to see your specific BIK tax, then compare the after-tax cash allowance value (e.g., £6,000 cash at 40% tax = £3,600 net to spend on a personal car). For broader UK income tax planning, see the UK income tax calculator and National Insurance calculator.
Last updated April 2026. Sources: gov.uk company car rates, HMRC.