Company Car Tax Calculator 2025-26

Company car BIK tax in 2025-26: what you need to know

When your employer provides a company car for private use, HMRC treats it as a taxable benefit in kind. The amount added to your income — the BIK value — is calculated as the car's list price multiplied by a percentage set by HMRC based on the car's CO2 emissions.

Electric vehicles attract the lowest BIK rate of just 3% in 2025-26, rising to 4% in 2026-27 and 5% in 2027-28. A £40,000 EV costs a basic rate taxpayer around £24/month in company car tax — far below the equivalent petrol or diesel car.

Diesel cars attract a 4% surcharge (already included in the rates above) on top of the standard CO2-based percentage, up to a maximum of 37%. This makes diesel company cars substantially more expensive to run from a tax perspective compared to equivalent petrol models.

Is a company car worth it?

Whether a company car is worth it depends on the BIK rate, your tax bracket, and whether you'd otherwise need to fund a car privately. For electric vehicles, the maths is almost always compelling: low BIK, no fuel costs, free charging at many workplaces, and no fuel duty or road tax. For high-emission vehicles, the tax cost can exceed a competitive private lease.