Company car tax calculator
Company car tax is simple once decoded: P11D value × the car's appropriate percentage × your income tax rate. For 2026/27 the percentage runs from 4% for a pure electric car to a 37% cap for the highest-emission petrol and diesel models, a spread so wide that the same £40,000 car costs a higher-rate taxpayer about £53 a month as an EV and nearly £400 a month in a 30%-band petrol model. That gap, not fuel economy, is why almost every new company car scheme is electric.
List price incl. options, before discounts
Exact petrol/diesel band by CO2: gov.uk table
Taxable benefit: £40,000 × 4% = £1,600.00 a year, costing you
£586.00 a year
£48.83 a month in extra income tax, usually collected through your tax code.
Why electric company cars dominate
The same £40,000 car costs £48.83 a month as an EV (4% BiK) against roughly £395.50 a month as a 30%-band petrol car. That gap, not fuel, is why nearly every new company car and salary-sacrifice car scheme is electric. No employee National Insurance is due on a benefit in kind; your employer pays Class 1A instead.
What is BiK (benefit in kind)?
BiK, benefit in kind, is a non-cash perk your employer gives you that HMRC taxes as if it were income, and a company car is the biggest one most people ever get. HMRC treats a slice of the car's list price (the P11D value multiplied by the CO2-based percentage above) as extra income, and you pay income tax on that slice at your marginal rate, but no National Insurance. The charge applies whether or not you actually drive the car much, which is why a low-BiK electric car can be worth thousands a year less in tax than a petrol car of the same price.
The parts people get wrong
- P11D value is list price, including options and VAT, before any fleet discount your employer negotiated. A discounted car is taxed on the undiscounted price.
- The benefit is taxed at your marginal rate: and because it counts as income, a big-enough car benefit can push you into a higher band or the £100k taper. This calculator measures that properly instead of multiplying by a flat 20% or 40%.
- Hybrids are banded by electric range: 4% with 130+ miles of range, rising to 16% under 30 miles. The exact petrol/diesel CO2 table is on gov.uk.
- Free fuel is a separate benefit with its own charge, and rarely worth taking, most drivers pay more tax on it than the fuel is worth.
Percentages checked 2026-08-28 against HMRC's appendix. The collection normally happens through your tax code, which is why company car drivers rarely see the standard code.