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Understanding Benefit in Kind (BIK)

(Posted on 10/11/23)

Benefit in Kind (BIK) is a tax that employees in the UK pay on the 'perk' of having a company car for personal use. It is a critical consideration when leasing a company car, as it can significantly impact your overall tax liability.

BIK Tax Bands

BIK tax bands in the UK are set by HMRC and are primarily based on a vehicle's CO2 emissions. If you drive a hybrid car that emits less than 50g/km, the rate is based on the zero-emissions range. This is the distance the car can go on electric power before its batteries need recharging.

The zero-emissions range can be found, on any car with less than 50g/km, by going to a car → finding the "Vehicle info" just below the picture of the car → locating the "Emissions free range (All Electric Range)

The lower the emissions, the lower the BIK tax you'll pay. This makes electric cars an attractive choice, as they have the lowest BIK tax.

Here's a table with BIK tax bands as per HMRC guidelines, the rates for the current tax year are highlighted in bold:

CO2 (g/km)

Electric range (miles)

2022-23 (%)

2023/24 (%)

2024/25 (%)

2025/26 (%)

2026/27 (%)

2027/28 (%)

0

N/A

2

2

2

3

4

5

1-50

>130

2

2

2

3

4

5

1-50

70-129

5

5

5

6

7

8

1-50

40-69

8

8

8

9

10

11

1-50

30-39

12

12

12

13

14

15

1-50

<30

14

14

14

15

16

17

51-54

 

15

15

15

16

17

18

55-59

 

16

16

16

17

18

19

60-64

 

17

17

17

18

19

20

65-69

 

18

18

18

19

20

21

70-74

 

19

19

19

20

21

21

75-79

 

20

20

20

21

21

21

80-84

 

21

21

21

22

22

22

85-89

 

22

22

22

23

23

23

90-94

 

23

23

23

24

24

24

95-99

 

24

24

24

25

25

25

100-104

 

25

25

25

26

26

26

105-109

 

26

26

26

27

27

27

110-114

 

27

27

27

28

28

28

115-119

 

28

28

28

29

29

29

120-124

 

29

29

29

30

30

30

125-129

 

30

30

30

31

31

31

130-134

 

31

31

31

32

32

32

135-139

 

32

32

32

33

33

33

140-144

 

33

33

33

34

34

34

145-149

 

34

34

34

35

35

35

150-154

 

35

35

35

36

36

36

155-159

 

36

36

36

37

37

37

160-164

 

37

37

37

37

37

37

165-169

 

37

37

37

37

37

37

170+

 

37

37

37

37

37

37

Why BIK Matters

The BIK tax rate directly affects the amount of tax you will pay on your company car. Choosing a vehicle with lower CO2 emissions can significantly reduce your BIK tax liability and save you money.

It's essential to consider the BIK implications when selecting a company car, and you should consult with a tax professional for personalised advice on how to minimise your tax liability.

If you have any further questions about BIK or need assistance in choosing the right company car to minimize your tax obligations, please don't hesitate to get in touch with our car leasing experts.

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