Company Car Tax Calculator
Work out the benefit in kind on a company car for 2026/27: what it costs you in Income Tax, and what it costs your employer in Class 1A National Insurance. Most calculators show you only the first half.
Rates last checked 11 September 2026 · Tax year 2026/27
How company car tax is calculated #
This company car tax calculator UK tool, which doubles as a benefit in kind calculator, needs three numbers and one multiplication. List price, times an appropriate percentage set by the car's emissions, taxed at your marginal Income Tax rate.
List price × appropriate percentage = taxable benefit. Benefit × your tax rate = what you pay.
The part that surprises people is the list price. It is the manufacturer's published price including VAT and delivery, plus any accessories. It is not what your employer paid, not the discounted price, and not what the car is worth now. A three-year-old car is taxed on what it cost new.
What is benefit in kind? #
The benefit in kind meaning is simple enough: something an employer provides that is not cash but still has value. A company car is the largest and most common, but private medical insurance, gym membership, an interest-free director's loan and living accommodation all count.
How does benefit in kind work? It is taxed as though it were salary. You pay Income Tax on the value at your marginal rate, and the employer pays Class 1A National Insurance at 15%. Benefits are reported on a P11D after the year end, or payrolled through the year so the tax comes off each month instead.
Benefit in kind tax is not a separate tax. It is Income Tax, collected through your tax code, which is why a company car usually shows up as a sudden drop in take-home rather than a bill.
Company car tax rates and bands for 2026/27 #
Company car tax rates come in three different shapes depending on the car, which is why a single table never quite covers it.
Zero emission
A flat 4%. Company car tax on electric cars has risen from 2% through 3% to this, and continues upward on a published schedule.
1 to 50g/km, banded by electric range
| Electric-only range | Appropriate percentage |
|---|---|
| 130 miles or more | 4% |
| 70 to 129 miles | 7% |
| 40 to 69 miles | 10% |
| 30 to 39 miles | 14% |
| Under 30 miles | 16% |
This is the band that decides whether a plug-in hybrid is worth having. The same car at 50g/km is taxed at 4% or 16% depending purely on how far it goes on the battery.
51g/km and above, banded by CO2
| CO2, g/km | Appropriate percentage |
|---|---|
| 51 to 54 | 17% |
| 55 to 59 | 18% |
| 60 to 64 | 19% |
| 65 to 69 | 20% |
| 70 to 74 | 21% |
| 75 to 79 | 21% |
| 80 to 84 | 22% |
| 85 to 89 | 23% |
| 90 to 94 | 24% |
| 95 to 99 | 25% |
| 100 to 104 | 26% |
| 105 to 109 | 27% |
| 110 to 114 | 28% |
| 115 to 119 | 28% |
| 120 to 124 | 30% |
| 125 to 129 | 31% |
| 130 to 134 | 32% |
| 135 to 139 | 33% |
| 140 to 144 | 34% |
| 145 to 149 | 35% |
| 150 to 154 | 36% |
| 155 to 159 | 37% |
| 160 and above | 37% |
CO2 is rounded down to the nearest 5g, so a car emitting 188g/km is treated as 185g/km. Bands from 75g upwards are frozen for 2026/27.
The diesel supplement #
A diesel car that does not meet the RDE2 standard adds 4 percentage points to its band, capped so the total never exceeds 37%. A diesel certified to Euro standard 6d is exempt and pays the same as an equivalent petrol.
Check the V5C or the manufacturer before assuming. Most recently registered diesels are compliant, and applying the supplement when it does not apply overstates the tax by a noticeable amount.
Free fuel is usually a bad deal #
If your employer pays for private fuel, that is a second benefit and it is not measured by how much fuel you use. It is a fixed multiplier of £29,200.00 times the same appropriate percentage as the car.
On a 30% car that is a taxable benefit of £8,760.00 on top of the car itself, whether you drive 500 private miles or 15,000. For most drivers, paying for your own fuel and claiming business mileage through the approved mileage rates costs considerably less.
Company vans are different, and usually cheaper #
There is no company van tax calculator needed, because a van is not taxed on list price at all. There is a flat van benefit charge of £4,170.00 for 2026/27, plus £798.00 if private fuel is provided.
Flat means flat: a £20,000.00 van and a £50,000.00 van carry the same charge. And if private use is limited to commuting and incidental journeys, there may be no benefit at all. For a trade business that is often the single largest difference between choosing a van and choosing a car.
The same split runs through capital allowances, where a van qualifies for reliefs a car never does.
The legitimate ways to pay less #
Searches for company car tax loopholes mostly turn up things that are not loopholes at all, just the rules working as intended.
- Choose a lower emission car. The entire system is built to make this the answer.
- Take a van instead, if the work supports it. Flat charge, no list price.
- Decline free fuel and claim business mileage instead.
- Contribute to the capital cost. A capital contribution reduces the list price used, up to a limit.
- Pay for private use. Payments made to the employer for private use reduce the benefit pound for pound.
- Give the car back part-year. The benefit is pro-rated for periods the car was genuinely unavailable.
What does not work: buying the car second-hand, the employer getting a discount, or the car depreciating. None of those touch the list price the tax is based on.
What this calculator does not cover #
It handles one car for a full tax year. It does not pro-rate a car provided part-way through the year, handle capital contributions or payments for private use, model classic cars or cars with no list price, or cover Scottish Income Tax rates, which differ from the rates used here.
It also assumes the benefit does not push you into a higher tax band. If you are near a threshold, a company car can move you across it, and the real cost is then higher than the single-rate figure above.
Company car tax for electric cars #
Company car tax electric cars attract is still the lowest of any fuel type, but it is rising on a published path. Benefit in kind on electric cars is 4% this year, not the 2% figure that circulated for years, and it is legislated to keep climbing.
That still compares well with a petrol equivalent. What is benefit in kind tax costing you depends on the list price as much as the rate, so a cheap electric car and an expensive one are taxed very differently even at the same percentage.
Company car tax levels run from 4% to 37%, and the company car tax calculator HMRC publishes uses the same appropriate percentages as the table above. Benefit in kind car calculations are the same arithmetic whoever runs them: list price times percentage.
Common questions #
How is company car tax calculated?
List price multiplied by an appropriate percentage set by the car's CO2 emissions, then taxed at your marginal Income Tax rate. The appropriate percentage runs from 4% for a zero emission car to a maximum of 37%.
What is benefit in kind?
A benefit in kind is something your employer gives you that is not cash but still has value, such as a company car, private medical cover or an interest-free loan. It is taxed as though it were pay, at your marginal rate, and the employer pays Class 1A National Insurance on it at 15%.
What is the company car tax rate on electric cars?
The appropriate percentage for a zero emission car is 4% for 2026/27, up from 3% the year before and on a published path to 5% in 2027/28. It was 2% for several years, so older guidance understates it.
How does benefit in kind work on a company car?
The taxable benefit is the list price times the appropriate percentage, regardless of what the employer actually paid for the car or what it is worth now. Discounts, second-hand purchase and depreciation make no difference. It is reported on a P11D or payrolled.
What are the company car tax bands?
Zero emission is a flat rate. Cars emitting 1 to 50g/km are banded by electric-only range rather than CO2. From 51g/km upwards the bands run in 5g steps, rising roughly one percentage point per step to the 37% cap at 160g/km.
Do diesel company cars pay more?
Yes, unless the car meets RDE2. A non-RDE2 diesel gets a 4 percentage point supplement on top of its normal band, capped so the total never exceeds 37%. An RDE2-compliant diesel pays the same as an equivalent petrol.
Is free fuel worth taking?
Rarely. Private fuel is taxed on a fixed multiplier of £29,200 times the same appropriate percentage, not on the fuel you actually use. Unless you do a very high private mileage, paying for your own fuel usually costs less than the tax on having it provided.