Company Car Tax Calculator 2025/26 (BIK Checker)
If your employer provides you with a car that you can use privately, HMRC treats it as a "Benefit in Kind" (BIK). Essentially, the car is treated as extra income, and you must pay Income Tax on it.
However, not all cars are created equal. The tax system is heavily weighted to encourage drivers into Electric Vehicles (EVs).
Electric Car BIK Rates 2026
For years, the BIK rate for EVs was incredibly low (sometimes 0% or 1%). As adoption grows, the government is slowly raising rates, but they remain a bargain compared to petrol.
- 2024/25: 2%
- 2025/26: 3% (Current Year)
- 2026/27: 4% (Confirmed)
- 2027/28: 5% (Confirmed)
Even at 5%, the tax on a £50,000 electric car is minimal compared to a £30,000 diesel car, which might attract a 33% tax rate.
Is a Salary Sacrifice Car Worth It?
Salary Sacrifice schemes allow you to give up part of your gross salary in exchange for a lease car. Because the payments come out before Income Tax and National Insurance, you save money.
The Golden Rule
Salary Sacrifice is fantastic for Electric Vehicles because the BIK tax you pay to get the car is tiny (3%). However, for Petrol/Diesel cars, the high BIK tax often cancels out the salary savings, making it poor value.
Understanding Company Car Tax Bands
The "Taxable Value" of payment isn't the cost of the lease—it's the P11D Value (List Price) multiplied by the BIK Rate.
For example, a driver earning £60,000 (40% taxpayer) choosing a car with a £40,000 list price:
- Tesla Model 3 (0g CO2): 3% BIK = £1,200 Taxable Benefit. Cost to you: £480/year (£40/month).
- BMW 3 Series Diesel (130g CO2): ~31% BIK = £12,400 Taxable Benefit. Cost to you: £4,960/year (£413/month).
The difference is nearly £400 a month in pure tax savings.
4% Diesel Surcharge
Diesel cars that do not meet the "RDE2" emissions standard attract a 4% surcharge on top of standard rates. Most new diesels are widely RDE2 compliant, so they avoid this, but older models may hit the maximum 37% tax cap.