PHEV Company Car Tax, £20,000 List Price
£35,000 salary · 10% BIK rate · England & Wales 2026-27
Company car BIK tax breakdown, 2026-27
| Car list price | £20,000 |
| BIK percentage (PHEV) | 10% |
| Taxable BIK value | £2,000 |
| Gross salary | £35,000 |
| Total taxable income (salary + BIK) | £37,000 |
| Income Tax on BIK | £400/year |
| Employee National Insurance on BIK | £0 (employer pays Class 1A) |
| Total annual BIK tax cost | £400/year |
| Monthly BIK tax cost | £33/month |
BIK value = £20,000 × 10% = £2,000. Tax calculated using 2026-27 England & Wales Income Tax rates. Employees pay no National Insurance on benefits in kind (GOV.UK).
Is this company car worth it?
PHEVs offer a middle ground: 10% BIK in 2026-27 for 40 to 69 miles of electric range (from 4% to 16% depending on range). If you charge regularly and do short trips on electric, running costs are competitive. For high-mileage drivers who rarely charge, the fuel costs can offset the tax saving.
| Scenario | Monthly cost |
|---|---|
| Company car BIK tax (this car) | £33 |
| Typical private car lease (comparable) | £100-£133 |
| EV alternative at 4% BIK (same list price) | £13/mo approx. |
Private lease estimates are approximate (list price ÷ 150-200). EV alternative uses the 4% BIK rate (2026-27) at basic rate Income Tax (20%). Actual figures depend on individual lease terms and tax position.
Personalised insights for this company car
On a £35,000 salary, the £400/year BIK charge consumes 1.1% of your gross income. For context, it would take 0.2 months of National Living Wage gross pay (£2,065/month) to cover this tax bill. The company car works out roughly £84/month cheaper than running a comparable PHEV privately, making it a net financial win.
PHEV company car tax on £35,000 salary, explained
With a £20,000 PHEV on a £35,000 salary, HMRC applies the 10% BIK rate to calculate a benefit in kind value of £2,000 per year. This amount is added to your gross salary, bringing your total taxable income to £37,000.
The additional Income Tax on this BIK is £400 per year (£33/month equivalent). You pay no National Insurance on it: your employer pays Class 1A National Insurance on the benefit. The company car costs you £400 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 £33/month tax cost.
Put differently: this BIK charge is the equivalent of sacrificing £556 of gross salary, because at your marginal rate (28% combined (basic rate IT + NI)), that gross figure would deliver the same net hit as the £400/year BIK tax. It also equates to roughly 0.2 months of National Living Wage gross pay (£24,785/year since 1 April 2026). The company car works out roughly £84/month cheaper than running a comparable PHEV privately, making it a net financial win. For many PHEV drivers, the decision hinges on how often you actually charge at home or at work.
Frequently asked questions
How much company car tax do I pay on a £20,000 PHEV on a £35,000 salary?
On a £35,000 salary, a £20,000 list price PHEV with a 10% BIK rate creates a benefit in kind value of £2,000 per year. This adds £400 in Income Tax per year (£33 per month). You pay no National Insurance on a company car: your employer pays Class 1A National Insurance on the benefit instead.
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 pay no employee National Insurance on it; your employer pays Class 1A. For this car, the 10% rate gives a BIK value of £2,000, adding £400 to your annual Income Tax bill.
Is a PHEV company car worth it?
PHEVs offer a middle ground: 10% BIK in 2026-27 for 40 to 69 miles of electric range (from 4% to 16% depending on range). If you charge regularly and do short trips on electric, running costs are competitive. For high-mileage drivers who rarely charge, the fuel costs can offset the tax saving. For this specific car (£20,000 list, £35,000 salary), the monthly BIK cost is £33.
Can I reduce company car tax?
Yes, the most effective way is to choose a lower-emission vehicle. Electric cars have a 4% BIK rate in 2026-27 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.
What is the monthly company car tax cost for a £20,000 PHEV?
The monthly BIK tax cost for a £20,000 PHEV on a £35,000 salary is £33/month, that is £400 of Income Tax a year collected through PAYE. Over a typical 3-year company car contract, this amounts to approximately £1,200 in total BIK tax.
How does the £20,000 P11D value affect my take-home pay compared to a salary increase?
A company car does not increase your cash take-home pay, it adds £2,000 to your taxable income, costing you £400/year in extra tax. To match the car value in after-tax cash, your employer would need to increase your salary by roughly £556 (salary, unlike the car, also bears National Insurance). Whether the car is worth more to you than that equivalent salary uplift depends on your personal use of the vehicle and whether you would otherwise pay for a private lease.