Company cars are taxed as a benefit in kind (BIK). Your employer adds the BIK value to your salary, and you pay Income Tax and National Insurance on it. Electric cars attract just 3% BIK, making them far cheaper to run as a company car than petrol or diesel.
How company car BIK tax is calculated
HMRC calculates your benefit in kind using: BIK value = list price × BIK percentage. This BIK value is added to your gross salary and taxed at your marginal Income Tax rate, plus 8% National Insurance (if below the upper earnings limit).
Electric (EV)
3% BIK 2025-26
PHEV (<30mi range)
12% BIK 2025-26
Petrol (avg 130-139g)
29% BIK 2025-26
Diesel (avg 130-139g)
33% BIK 2025-26
Electric (EV), 3% BIK
£20,000 list price
£25,000 salary £14/mo £30,000 salary £14/mo £35,000 salary £14/mo £40,000 salary £14/mo £50,000 salary £18/mo £60,000 salary £21/mo £70,000 salary £21/mo £80,000 salary £21/mo
£30,000 list price
£25,000 salary £21/mo £30,000 salary £21/mo £35,000 salary £21/mo £40,000 salary £21/mo £50,000 salary £28/mo £60,000 salary £32/mo £70,000 salary £32/mo £80,000 salary £32/mo
£40,000 list price
£25,000 salary £28/mo £30,000 salary £28/mo £35,000 salary £28/mo £40,000 salary £28/mo £50,000 salary £39/mo £60,000 salary £42/mo £70,000 salary £42/mo £80,000 salary £42/mo
£50,000 list price
£25,000 salary £35/mo £30,000 salary £35/mo £35,000 salary £35/mo £40,000 salary £35/mo £50,000 salary £49/mo £60,000 salary £53/mo £70,000 salary £53/mo £80,000 salary £53/mo
£60,000 list price
£25,000 salary £42/mo £30,000 salary £42/mo £35,000 salary £42/mo £40,000 salary £42/mo £50,000 salary £60/mo £60,000 salary £63/mo £70,000 salary £63/mo £80,000 salary £63/mo
PHEV, 12% BIK
£30,000 list price
£25,000 salary £84/mo £30,000 salary £84/mo £35,000 salary £84/mo £40,000 salary £84/mo £50,000 salary £123/mo £60,000 salary £126/mo £70,000 salary £126/mo £80,000 salary £126/mo £40,000 list price
£25,000 salary £112/mo £30,000 salary £112/mo £35,000 salary £112/mo £40,000 salary £112/mo £50,000 salary £165/mo £60,000 salary £168/mo £70,000 salary £168/mo £80,000 salary £168/mo
£50,000 list price
£25,000 salary £140/mo £30,000 salary £140/mo £35,000 salary £140/mo £40,000 salary £140/mo £50,000 salary £207/mo £60,000 salary £210/mo £70,000 salary £210/mo £80,000 salary £210/mo
£60,000 list price
£25,000 salary £168/mo £30,000 salary £168/mo £35,000 salary £168/mo £40,000 salary £168/mo £50,000 salary £249/mo £60,000 salary £252/mo £70,000 salary £252/mo £80,000 salary £252/mo
Petrol, 29% BIK
£20,000 list price
£25,000 salary £135/mo £30,000 salary £135/mo £35,000 salary £135/mo £40,000 salary £135/mo £50,000 salary £200/mo £60,000 salary £203/mo £70,000 salary £203/mo £80,000 salary £203/mo
£30,000 list price
£25,000 salary £203/mo £30,000 salary £203/mo £35,000 salary £203/mo £40,000 salary £203/mo £50,000 salary £301/mo £60,000 salary £305/mo £70,000 salary £305/mo £80,000 salary £305/mo
£40,000 list price
£25,000 salary £271/mo £30,000 salary £271/mo £35,000 salary £271/mo £40,000 salary £286/mo £50,000 salary £403/mo £60,000 salary £406/mo £70,000 salary £406/mo £80,000 salary £406/mo
£50,000 list price
£25,000 salary £338/mo £30,000 salary £338/mo £35,000 salary £338/mo £40,000 salary £388/mo £50,000 salary £504/mo £60,000 salary £508/mo £70,000 salary £508/mo £80,000 salary £508/mo
£60,000 list price
£25,000 salary £406/mo £30,000 salary £406/mo £35,000 salary £431/mo £40,000 salary £489/mo £50,000 salary £606/mo £60,000 salary £609/mo £70,000 salary £609/mo £80,000 salary £609/mo Diesel, 33% BIK
£20,000 list price
£25,000 salary £154/mo £30,000 salary £154/mo £35,000 salary £154/mo £40,000 salary £154/mo £50,000 salary £228/mo £60,000 salary £231/mo £70,000 salary £231/mo £80,000 salary £231/mo
£30,000 list price
£25,000 salary £231/mo £30,000 salary £231/mo £35,000 salary £231/mo £40,000 salary £231/mo £50,000 salary £343/mo £60,000 salary £347/mo £70,000 salary £347/mo £80,000 salary £347/mo
£40,000 list price
£25,000 salary £308/mo £30,000 salary £308/mo £35,000 salary £308/mo £40,000 salary £342/mo £50,000 salary £459/mo £60,000 salary £462/mo £70,000 salary £462/mo £80,000 salary £462/mo
£50,000 list price
£25,000 salary £385/mo £30,000 salary £385/mo £35,000 salary £399/mo £40,000 salary £458/mo £50,000 salary £574/mo £60,000 salary £578/mo £70,000 salary £578/mo £80,000 salary £578/mo
£60,000 list price
£25,000 salary £462/mo £30,000 salary £462/mo £35,000 salary £515/mo £40,000 salary £573/mo £50,000 salary £690/mo £60,000 salary £693/mo £70,000 salary £693/mo £80,000 salary £693/mo
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.