Petrol Company Car Tax — £40,000 List Price
£50,000 salary · 29% BIK rate · England & Wales 2025-26
Company car BIK tax breakdown — 2025-26
| Car list price | £40,000 |
| BIK percentage (Petrol) | 29% |
| Taxable BIK value | £11,600 |
| Gross salary | £50,000 |
| Total taxable income (salary + BIK) | £61,600 |
| Income Tax on BIK | £4,586/year |
| National Insurance on BIK | £249/year |
| Total annual BIK tax cost | £4,835/year |
| Monthly BIK tax cost | £403/month |
BIK value = £40,000 × 29% = £11,600. Tax calculated using 2025-26 England & Wales Income Tax and National Insurance rates.
Is this company car worth it?
Petrol company cars at 29% BIK carry a significant tax burden. Compare the monthly cost above against what you would pay for an equivalent private lease — for many drivers, a private car or EV salary sacrifice may be more cost-effective.
| Scenario | Monthly cost |
|---|---|
| Company car BIK tax (this car) | £403 |
| Typical private car lease (comparable) | £200–£267 |
| EV alternative at 3% BIK (same list price) | £28/mo approx. |
Private lease estimates are approximate (list price ÷ 150–200). EV alternative uses 3% BIK rate at basic rate tax (20% IT + 8% NI). Actual figures depend on individual lease terms and tax position.
Petrol company car tax on £50,000 salary — explained
With a £40,000 Petrol on a £50,000 salary, HMRC applies the 29% BIK rate to calculate a benefit in kind value of £11,600 per year. This amount is added to your gross salary, bringing your total taxable income to £61,600.
The additional Income Tax on this BIK is £4,586 per year (£403/month equivalent). You also pay National Insurance of £249 per year on the BIK value. Combined, the company car costs you £4,835 per year in extra tax — deducted through PAYE each pay period.
Unlike salary, you do not receive cash for the BIK — the car is the benefit. The question is whether the car's value to you (private fuel, convenience, cost vs. personal leasing) exceeds the £403/month tax cost.
Frequently asked questions
How much company car tax do I pay on a £40,000 Petrol on a £50,000 salary?
On a £50,000 salary, a £40,000 list price Petrol with a 29% BIK rate creates a benefit in kind value of £11,600 per year. This adds £4,586 in Income Tax and £249 in National Insurance — a total of £4,835 per year (£403 per month).
How is company car tax calculated?
HMRC calculates company car tax using: BIK value = list price × CO2-based percentage. The BIK value is added to your gross salary and taxed at your marginal Income Tax rate. You also pay National Insurance at 8% (or 2% above £50,270) on the BIK value. For this car, the 29% rate gives a BIK value of £11,600, adding £4,835 to your annual tax and NI bill.
Is a Petrol company car worth it?
Petrol company cars at 29% BIK carry a significant tax burden. Compare the monthly cost above against what you would pay for an equivalent private lease — for many drivers, a private car or EV salary sacrifice may be more cost-effective. For this specific car (£40,000 list, £50,000 salary), the monthly BIK cost is £403.
Can I reduce company car tax?
Yes — the most effective way is to choose a lower-emission vehicle. Electric cars have a 3% BIK rate versus 29-37% for high-emission petrol/diesel. You can also make a capital contribution (up to £5,000) to reduce the list price used in the BIK calculation. Alternatively, returning the company car and taking additional salary or opting for an EV salary sacrifice scheme avoids company car tax entirely.
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