Paying benefit in kind (BiK) on your company car

If you currently use a company car as a work benefit, you are liable to pay tax on it. Company car tax or benefit in kind (BiK) car tax is paid by employees, who are given a company car for personal use, including commuting. This is often through the use of a company car but it can also be a personal or leased car that is paid for by your employer.

How is BiK calculated

Benefit in kind car tax is calculated based on 3 variables:

P11D value of the car - the list price of your vehicle
CO2 emissions - the amount of CO2 your car emits
Income tax band - your personal income tax rate

Benefit in kind (BiK) car tax = P11D value of car x BiK band x income tax rate

In order to make the calculations, you will also need to ascertain the BiK banding of your car. BiK tax bands are based on your car’s CO2 emissions. If you are unsure of your car’s CO2 emissions, HMRC provides a tool where you can check the car fuel and CO2 emissions of all vehicles.

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BiK rates 2023-2028

The below table sets out the BiK rates for company cars up to 2028, as determined by HMRC.

The percentage in the tables is that of the P11D value (list price) of your car.

Note: If viewing on mobile, turn your phone to the side to see the full table.

CO2 Emissions (g/km)	Electric range (mi)	2023/2024-25 (%)	2025-26 (%)	2026-27 (%)	2027-28 (%)
0	N/A	2	3	4	5
1-50	>130	2	3	4	5
1-50	70-129	5	6	7	8
1-50	40-69	8	9	10	11
1-50	30-39	12	13	14	15
1-50	<30	14	15	16	17
51-54		15	16	17	18
55-59		16	17	18	19
60-64		17	18	19	20
65-69		18	19	20	21
70-74		19	20	21	21
75-79		20	21	21	21
80-84		21	22	22	22
85-89		22	23	23	23
90-94		23	24	24	24
95-99		24	25	25	25
100-104		25	26	26	26
105-109		26	27	27	27
110-114		27	28	28	28
115-119		28	29	29	29
120-124		29	30	30	30
125-129		30	31	31	31
130-134		31	32	32	32
135-139		32	33	33	33
140-144		33	34	34	34
145-149		34	35	35	35
150-154		35	36	36	36
155-159		36	37	37	37
160-170+		37	37	37	37

BiK on electric company cars

There is a reduced BiK rate if you have an electric company car. In fact, electric cars enjoy some of the lowest benefit in kind rates. Currently, the benefit in kind (BiK) rate for electric cars is 2%. This rate is set to continue into 2024/2025.

However, the UK government did announce that the rate will increase by 1% in the next 3 consecutive years.

Read our separate guide on compary car tax on electric cars.

BiK on hybrid company cars

For hybrid company cars, the BiK car tax is determined in a similar fashion to conventional vehicles. Since hybrids usually have lower CO2 emissions than petrol cars, you can expect the BiK rate to be lower.

If the car's CO2 emissions are between 1 and 50 g/km, then your benefit in kind rate is based on the vehicle's ‘electric range’ or zero emission mileage figure (see table above).

Low BiK cars

If you are wondering how to make the most out of your benefit in kind tax, it would depend heavily on the kind of car you drive.

For instance, electric cars will give you the lowest BIK as they have the lowest CO2 emissions. Electric models like the Renault Twizy with a £12,000 list price or a SEAT Mii Electric with a list price of £23,000 (lower than average market price on most car models) can also help you keep your benefit in kind tax down.

If you want to go further into the topic, read our full guide to company car tax.

FAQ

Do I have to pay tax on company car fuel?

Yes. If you are using a company car and your employer pays for any fuel used in your company car, you are liable to pay company car fuel benefit. To calculate your fuel benefit, multiply your benefit in kind (BiK) rate by your fuel charge multiplier. You can find your fuel charge multiplier on the HMRC website.

How can I keep my benefit in kind (BiK) car tax down?

The amount of your benefit in kind (BiK) car tax will be heavily dependent on the kind of car you get, its emissions and your income tax band. If the amount is too high, there is the option of switching your company car to one with a lower emission (or an electric car). However, this also depends on the company car scheme you are enrolled in with your employer- an alternative model may not be available.