Company Car Tax UK:
BIK Rates for 2026/27
Company car Benefit in Kind (BIK) tax is based on the car's list price and CO2 emissions. Electric company cars now attract a 4% BIK rate, making them significantly cheaper than petrol or diesel for most employees.
How Company Car BIK Tax Is Calculated
The BIK Formula:
List price x BIK percentage x your income tax rate = annual company car tax
Worked example (basic rate taxpayer):
- Car list price: £30,000
- Higher-CO2 petrol car: 33% BIK rate
- BIK taxable value: £30,000 x 33% = £9,900
- Annual tax (20% taxpayer): £9,900 x 20% = £1,980/year
- Monthly deduction from salary: £165
Electric car vs petrol comparison (same £40,000 list price, basic rate taxpayer):
Electric (4% BIK)
BIK value: £40,000 x 4% = £1,600
Annual tax: £1,600 x 20% = £320/year
Petrol (33% BIK)
BIK value: £40,000 x 33% = £13,200
Annual tax: £13,200 x 20% = £2,640/year
Choosing the electric car saves this employee £2,320/year in income tax.
BIK Calculator
BIK Rate
30%
Taxable BIK Value
£9,000
Annual Tax
£1,800
Monthly Tax
£150
Employer Class 1A NIC at 15%: £1,350/year. BIK appropriate percentages for the 2026/27 tax year (HMRC 480: Appendix 2).
BIK Rates Table: 2026/27 to 2029/30
| Category | 2026/27 | 2027/28 | 2028/29 | 2029/30 |
|---|---|---|---|---|
| Electric (zero emission) | 4% | 5% | 7% | 9% |
| PHEV, 130+ mile electric range | 4% | 5% | 18% | 19% |
| PHEV, 70-129 mile electric range | 7% | 8% | 18% | 19% |
| PHEV, 40-69 mile electric range | 10% | 11% | 18% | 19% |
| PHEV, 30-39 mile electric range | 14% | 15% | 18% | 19% |
| PHEV, under 30 mile electric range | 16% | 17% | 18% | 19% |
| Petrol/diesel, 1-50 g/km (no electric range) | 16% | 17% | 18% | 19% |
| 51-54 g/km | 16% | 16% | 17% | 18% |
| 55-59 g/km | 17% | 17% | 18% | 19% |
| 60-64 g/km | 18% | 18% | 19% | 20% |
| 65-69 g/km | 19% | 19% | 20% | 21% |
| 70-74 g/km | 20% | 20% | 21% | 22% |
| 75-79 g/km | 21% | 21% | 22% | 23% |
| 80-84 g/km | 22% | 22% | 23% | 24% |
| 85-89 g/km | 23% | 23% | 24% | 25% |
| 90-94 g/km | 24% | 24% | 25% | 26% |
| 95-99 g/km | 25% | 25% | 26% | 27% |
| 100-104 g/km | 26% | 26% | 27% | 28% |
| 105-109 g/km | 27% | 27% | 28% | 29% |
| 110-114 g/km | 28% | 28% | 29% | 30% |
| 115-119 g/km | 29% | 29% | 30% | 31% |
| 120-124 g/km | 30% | 30% | 31% | 32% |
| 125-129 g/km | 31% | 31% | 32% | 33% |
| 130-134 g/km | 32% | 32% | 33% | 34% |
| 135-139 g/km | 33% | 33% | 34% | 35% |
| 140-144 g/km | 34% | 34% | 35% | 36% |
| 145-149 g/km | 35% | 35% | 36% | 37% |
| 150-154 g/km | 36% | 36% | 37% | 38% |
| 155-159 g/km | 37% | 37% | 38% | 39% |
| 160+ g/km | 37% | 37% | 38% | 39% |
All rates verified against HMRC 480: Appendix 2 and comcar.co.uk (June 2026). The 51 g/km and above rows are the exact appropriate percentages: they rise 1 percentage point per 5 g/km. From 6 April 2028 the zero-emission-range split for 1-50 g/km cars is removed and all pay a single rate (18% in 2028/29, 19% in 2029/30). Bands of 51 g/km and above are frozen for 2026/27 and 2027/28, then rise 1 percentage point per year; the maximum is 37% (to 2027/28), 38% (2028/29), 39% (2029/30). Diesel cars that do not meet the RDE2 (Euro 6d) standard add a 4 percentage-point supplement, up to that year's maximum.
Electric Car BIK Rates by Tax Year (2020/21 to 2029/30)
The electric (zero-emission) Benefit-in-Kind percentage was frozen at 2% for 2022/23, 2023/24 and 2024/25, which is why EVs were such a cheap company car choice. It has been rising since 2025/26. The table shows the appropriate percentage each year and the cost on a £40,000 electric car for a 20% (basic-rate) taxpayer.
| Tax year | EV BIK % | Benefit on £40,000 EV | Tax (20% payer) | Notes |
|---|---|---|---|---|
| 2020/21 | 0% | £0 | £0 | First zero-rate year |
| 2021/22 | 1% | £400 | £80 | |
| 2022/23 | 2% | £800 | £160 | Frozen at 2% |
| 2023/24 | 2% | £800 | £160 | Frozen at 2% |
| 2024/25 | 2% | £800 | £160 | Frozen at 2% |
| 2025/26 | 3% | £1,200 | £240 | |
| 2026/27 | 4% | £1,600 | £320 | Current year |
| 2027/28 | 5% | £2,000 | £400 | |
| 2028/29 | 7% | £2,800 | £560 | |
| 2029/30 | 9% | £3,600 | £720 | Cap for EVs |
Petrol and diesel appropriate percentages were also frozen for 2022/23 to 2024/25, then rose by one point in 2025/26; the lowest petrol band (51-54 g/km) is 16% in 2026/27 and the maximum is 37%. Source: HMRC 480: Appendix 2 and HM Treasury Autumn Budget 2024. Verified June 2026.
Salary Sacrifice Schemes
A salary sacrifice arrangement lets employees give up part of their gross salary in exchange for a car through their employer. The employer leases the car and the employee's salary is reduced by the lease cost before tax and National Insurance are applied.
For electric vehicles, this is particularly attractive. The BIK rate is so low (4% in 2026/27) that the tax payable on the benefit is much less than the NI savings from the salary reduction. An employee choosing a £35,000 EV on salary sacrifice can save thousands of pounds per year compared to buying the same car personally.
Salary sacrifice schemes are offered by many large employers. The employer also benefits because they pay lower employer National Insurance on the reduced salary. Both sides can win, especially with EVs.
Employer Cost: Class 1A National Insurance
Employers must pay Class 1A National Insurance Contributions (NIC) on the BIK value of any company cars they provide. From 6 April 2026, the Class 1A NIC rate is 15% of the BIK value.
Electric (4% BIK, £40k car)
BIK value: £1,600
Employer NIC: £240/year
Petrol (33% BIK, £40k car)
BIK value: £13,200
Employer NIC: £1,980/year
Company Car Tax FAQs
What is the company car BIK rate for an electric car in 2026/27?
Fully electric (zero-emission) company cars have a 4% Benefit-in-Kind appropriate percentage in 2026/27. It then rises to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30.
What are the BIK rates for petrol and diesel company cars?
For 2026/27 the appropriate percentage runs from 16% (cars emitting 51-54 g/km of CO2) up to a maximum of 37% (170 g/km and above), rising one percentage point for every 5 g/km. Diesel cars that do not meet the RDE2 (Euro 6d) standard add a 4 percentage-point supplement, up to the 37% cap.
What is the BIK rate for a plug-in hybrid (PHEV)?
In 2026/27 a PHEV emitting 1-50 g/km is taxed between 4% (130+ miles of electric-only range) and 16% (under 30 miles). From 6 April 2028 the electric-range split is removed and all 1-50 g/km cars pay 18% in 2028/29 then 19% in 2029/30.
Were electric company car BIK rates always this low, and what were the rates in 2022/23?
Yes. Fully electric company cars were taxed at 0% in 2020/21, 1% in 2021/22, then frozen at 2% for 2022/23, 2023/24 and 2024/25. The rate rose to 3% in 2025/26 and is 4% in 2026/27, then climbs by 1 to 2 points a year to 9% in 2029/30. Even at 9% an EV stays far below a typical petrol or diesel car's 25 to 37%.
How is company car tax calculated?
Multiply the car's list price (P11D value) by its BIK appropriate percentage to get the taxable benefit, then multiply by your income tax rate. For example, a £30,000 car at 33% gives a £9,900 benefit, and a 20% taxpayer pays £1,980 a year.
How much employer National Insurance is due on a company car?
Employers pay Class 1A National Insurance at 15% of the BIK value from 6 April 2025. On a £40,000 electric car (4% BIK, a £1,600 benefit) that is £240 a year.