Company Car Benefit In Kind Taxation

When employees receive a company car for personal use they will be taxed on the Benefit in Kind (BIK). The tax paid on the company car BIK is referred to as Company Car Tax (CCT).

What is BIK?

Benefit in Kind (BIK) is a tax that employees must pay when they receive a benefit from their employer that is not included in their salary, such as a company car available for private use. This is commonly referred to as Company Car Tax. The BIK tax is calculated by multiplying the car's list price (which includes optional accessories) by the relevant percentage based on the car's emissions.

The relevant percentage for the tax years starting from 2024/25 is outlined below.

Benefit in Kind (BIK) CO₂ Bands by Tax Year g/km (Registered from April 2020)

The Benefit In Kind table below shows the company car tax % based on CO2 emissions.

The BIK bands are set by HMRC and are based on a vehicle's CO2 emissions. A rate applies to electric or alternative fuel cars that emit zero CO2 emissions - check here.

If you drive a plug-in hybrid car that emits less than 50g/km, the rate is based on the battery zero-emissions range. This is the distance (measured in miles) the car/van can go on electric power before its batteries need recharging.

CO2 (g/km)	Electric range (miles)	2024/25 (%)	2025/26 (%)	2026/27 (%)	2027/28 (%)	2028/29 (%)	2029/30 (%)
0	N/A	2	3	4	5	7	9
1-50	>130	2	3	4	5	18	19
1-50	70-129	5	6	7	8	18	19
1-50	40-69	8	9	10	11	18	19
1-50	30-39	12	13	14	15	18	19
1-50	<30	14	15	16	17	18	19
51-54		15	16	17	18	19	20
55-59		16	17	18	19	20	21
60-64		17	18	19	20	21	22
65-69		18	19	20	21	22	23
70-74		19	20	21	21	22	23
75-79		20	21	21	21	22	23
80-84		21	22	22	22	23	24
85-89		22	23	23	23	24	25
90-94		23	24	24	24	25	26
95-99		24	25	25	25	26	27
100-104		25	26	26	26	27	28
105-109		26	27	27	27	28	29
110-114		27	28	28	28	29	30
115-119		28	29	29	29	30	31
120-124		29	30	30	30	31	32
125-129		30	31	31	31	32	33
130-134		31	32	32	32	33	34
135-139		32	33	33	33	34	35
140-144		33	34	34	34	35	36
145-149		34	35	35	35	36	37
150-154		35	36	36	36	37	38
155-159		36	37	37	37	38	39
160-164		37	37	37	37	38	39
165-169		37	37	37	37	38	39
170+		37	37	37	37	38	39

Employers National Insurance

The employer also has to pay National Insurance Contributions against this Benefit in Kind (BIK) – Employer’s (secondary) Class 1 contribution

The standard rate for Employer’s Class 1 NIC on BIKs is 15%.

Electric Vehicle Range Figures (Electric Mileage Range/Zero Emission Mileage/Zero Emission Range

Electric range is the number of miles which is the equivalent of the number of kilometres specified in an EC certificate of conformity, an EC type-approval certificate or a UK approval certificate on the basis of which a car is registered, as being the maximum distance for which the car can be driven in electric mode without recharging the battery.

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To work out the BIK tax you’ll pay:

Multiply the vehicle’s P11D value by the applicable BIK percentage (based on emissions).
Multiply that figure by your income tax rate (e.g. 20% or 40%).

This gives you your annual Company Car Tax. Divide it by 12 to see how much will be deducted per month.

Since BIK is based on the vehicle's P11D value and emissions, choosing a vehicle with lower emissions or a lower P11D value can help reduce the cost. At the moment, zero-emission vehicles have the lowest BIK rates, offering the most cost-effective option.

Benefit in Kind (BIK) is the tax you pay for having the use of a company vehicle outside of business use. This includes any social or private use and includes commuting to work. Benefit in Kind is based on a vehicle’s value (P11D), its CO2 emissions, and your tax band. The table below shows you what percentage of the P11D you will pay as tax (first column) based on the CO2 emissions of your car. Notice below that the CO2 g/km ranges change yearly, you will need to keep track of these changes if you want to understand how much tax you will be paying year on year.