Benefit in Kind Calculator
Ellie SleightholmUse this free benefit-in-kind calculator to work out your BiK tax for the 2026/27 tax year. It covers company cars, company vans, employer-provided fuel, and private medical insurance, and it works out the correct BiK percentage for you from your car's CO₂ emissions, so you do not need to know your rate before you start.
For 2026/27, a fully electric company car is taxed at 4% of its list price, petrol and diesel cars sit between 17% and 37%, and the car fuel benefit multiplier has risen to £29,200. All the rates and figures on this page apply from 6 April 2026.
- Electric company car rate
- 4%
- Petrol and diesel bands
- 17–37%
- Car fuel benefit multiplier
- £29,200
- Rates apply from
- 6 Apr 2026
Step by step
How to Use This BiK Calculator
- 1
Pick your benefit type
Company car, company van, or private medical insurance.
- 2
Choose the vehicle type
Electric, plug-in hybrid, petrol, or diesel. For diesel, select whether the car meets the RDE2 standard, since older diesels carry a 4% surcharge.
- 3
Enter the CO₂ emissions and P11D value
The calculator matches your CO₂ figure to the official HMRC band and applies the right percentage automatically. For a plug-in hybrid, add the electric-only range too. You can find CO₂ emissions on the V5C logbook or the manufacturer's website.
- 4
Set your tax band
Choose 20%, 40%, or 45%, or enter your salary, and the calculator picks the band for you.
- 5
Add fuel if it applies
If your employer pays for your private fuel, switch the fuel benefit on, and the extra charge is included.
The basics
What Is a Benefit in Kind?
A benefit in kind, usually shortened to BiK, is any perk your employer gives you that has real monetary value but is not paid as cash. HMRC taxes these perks as income, because otherwise a company could simply pay people in cars, insurance, and vouchers instead of a taxable salary.
Taxable
Common benefit-in-kind examples
- Company car for private use
- Private medical or dental insurance
- Interest-free loans above £10,000
- Employer-paid fuel for personal journeys
Tax-free
Perks HMRC does not tax
- Employer pension contributions
- One mobile phone
- Cycle-to-work bikes
- Workplace charging for an electric company car
The formula
How Is Benefit in Kind Calculated?
For a company car, the calculation comes down to one line:
P11D value
The car's list price when new, including VAT, delivery, and factory-fitted options. It is not the discounted price your employer paid, and not the car's current second-hand value.
BiK percentage
Set by the car's CO₂ emissions and, for plug-in hybrids, the electric-only range. The cleaner the car, the lower the rate.
Your tax rate
You then pay income tax on the resulting taxable value at your own band: 20%, 40% or 45%.
For other benefits, the same logic applies with a different starting value. Private medical insurance uses the premium your employer pays. A company van uses a flat rate set by HMRC each year.
Rates by year
Company Car BiK Rates: 2025/26 to 2029/30
BiK rates did change in April 2026. The electric car rate rose from 3% to 4%, and every band is on a confirmed upward path. These are the rates for a fully electric car and typical petrol and diesel bands across the coming years:
| Tax year | Electric (0 g/km) | Petrol/diesel (51 g/km+) |
|---|---|---|
| 2025/26 | 3% | 16% to 37% |
| 2026/27 (current) | 4% | 17% to 37% |
| 2027/28 | 5% | 18% to 38% |
| 2028/29 | 7% | 18% to 38% |
| 2029/30 | 9% | 19% to 39% |
Benefit in kind on electric cars
Electric cars remain the clear winner for company car tax. Even when the rate reaches its 9% cap in 2029/30, an EV will attract less than a quarter of the tax of a mid-range petrol car. There is also no fuel benefit charge on an electric car, because HMRC does not class electricity as a fuel. Your employer can pay for all your charging without any extra tax.
Hybrid company car tax
Plug-in hybrids sit between 6% and 19% for 2026/27, with the band set by electric-only range. The longer the range, the lower the rate. Watch out for long leases, though: from April 2028, most hybrids move to a flat 18% regardless of range, so a hybrid that looks cheap today gets noticeably more expensive before a four-year term ends.
Real numbers
Worked Examples
Example 1: Electric company car
Sana · basic rate
Fully electric, £40,000 P11D
- P11D value
- £40,000
- BiK rate
- 4%
- Taxable benefit
- £1,600
- Tax rate
- 20%
Sana drives a fully electric car with a P11D value of £40,000. At 4%, her taxable benefit is £1,600. As a basic rate taxpayer, she pays 20% of that, which is £320 a year, or about £27 a month.
Example 2: Petrol company car
James · higher rate
Petrol, £40,000 P11D
- P11D value
- £40,000
- BiK rate
- 29%
- Taxable benefit
- £11,600
- Tax rate
- 40%
James drives a petrol car, also listed at £40,000, in the 29% band. His taxable benefit is £11,600. At the 40% higher rate, that costs £4,640 a year, roughly £387 a month.
Private fuel
Fuel Benefit: When Your Employer Pays for Private Fuel
If your employer provides fuel for private mileage in a company car, HMRC charges a separate fuel benefit. It ignores how much fuel you actually use. Instead, a fixed multiplier of £29,200 for 2026/27 is multiplied by the same CO₂ percentage as the car.
James's 29% car
Multiplier
£29,200
× BiK rate
29%
Fuel benefit
£8,468
For James's 29% car, the fuel benefit is £8,468, costing him £3,387 a year in tax at the higher rate.
Vans
Company Van Tax
Vans are much simpler. Instead of a CO₂ scale, HMRC applies a flat van benefit charge of £4,170 for 2026/27.
- Flat van benefit charge, 2026/27
- £4,170
- Yearly tax for a basic rate taxpayer
- £834
- Yearly tax for a higher rate taxpayer
- £1,668
- Flat charge for private fuel in a van
- £798
Health cover
BiK on Private Medical Insurance
Medical cover is the second most common benefit after vehicles, and the calculation is the simplest of all: the taxable value is the premium your employer pays.
HMRC normally collects it by adjusting your tax code rather than sending a bill.
Example
If your employer pays £1,800 a year to cover you and your partner, a higher-rate taxpayer owes 40% of that, which is £720.
Premium
£1,800
At 40%
£720
Payslips
How BiK Affects Your Tax Code and Payslip
This is where most of the real-world confusion sits, so here is exactly how the payment side works:
Tax code with a £1,800 benefit
BiK is normally collected monthly through your tax code
HMRC reduces your tax-free personal allowance by the value of the benefit, so a little more tax comes out of each payslip. You will see a lower number in your code, for example, 1257L dropping to around 1077L for a £1,800 benefit.
Some employers pay the benefit instead
The cash value is added to your taxable pay each month and taxed in real time. Your tax code stays normal, but your monthly tax rises. This becomes the standard approach for most benefits from April 2027.
You only pay for the days you have the benefit
If you get a company car in January, you are taxed on roughly three months of benefit for that tax year, not twelve. The same proration applies when you hand a car back in.
If you give up a benefit, tell HMRC
Your employer's year-end P11D is what finally settles the numbers, but it can take months. Update the benefit yourself in your personal tax account or call HMRC, and your code will be corrected straight away. Any overpaid tax comes back either through your payslip or as a P800 refund after the year ends.
If you would rather settle the tax in one go instead of through your code, you have two routes: ask HMRC to reconcile the year and issue a P800 payment instead of a code adjustment, or register for Self Assessment and pay the balance after the year ends.
Most people find the tax code route easier, since the total paid is identical either way. If the car sits in your own company, weigh the whole picture, the company's relief and your personal charge together, alongside our sole trader vs limited company calculator.
Legitimate savings
How to Reduce Benefit in Kind Tax
There is no trick that makes a taxable benefit tax-free, but there are entirely legitimate ways to cut the bill:
Choose an electric car
The single biggest lever. Dropping from a 29% petrol band to the 4% EV band cuts the tax by over 85% on the same list price.
Skip the private fuel
Pay for your own private mileage and the fuel benefit disappears. Unless you drive heavy private miles, this almost always saves money.
Mind the P11D value
The tax follows the list price, including options. A modest spec saves tax every single year you have the car.
Check the pool car rules
A car shared between employees, kept at the workplace overnight and not used privately, carries no BiK at all. HMRC applies these tests strictly.
Use salary sacrifice carefully
Sacrificing salary for an EV usually saves money overall because the salary you give up escapes income tax and National Insurance while the BiK charge stays small. Be aware of the side effect: your pension contributions are usually calculated on the reduced salary, so your monthly pension saving falls unless your employer bases contributions on the pre-sacrifice figure.
The full HMRC rules for every benefit type are set out in the official guide to tax on company benefits.
Questions
Frequently Asked Questions
Is a benefit in kind paid monthly?
Effectively yes. Whether it is collected through a reduced tax code or payrolled directly, the tax spreads evenly across your payslips rather than arriving as a single bill.
Can I pay my BiK tax in one lump sum?
Not directly through PAYE, and there is no pay-now button in your HMRC account for a coded benefit. Your options are to ask HMRC to reconcile the tax year and issue a P800 payment or to settle through Self Assessment. The amount of tax is the same either way, so most people simply leave it in their code.
Do I pay a full year of BiK if I only have the car for part of the year?
No. The benefit is prorated for the days the car is available to you. Start a company car in the last month of the tax year, and you are taxed on one month of benefit, not twelve.
What is the £40,000 car tax rule?
That rule is not a benefit in kind. It is the expensive car supplement on vehicle excise duty: cars with a list price above £40,000 pay an extra annual charge in years two to six of registration. It is paid by whoever taxes the vehicle, so for a company car, it is the company's cost, separate from your BiK.
What is the 60% trap?
The taxable value of your benefits counts towards your adjusted net income. If salary plus benefits push you past £100,000, you start losing your personal allowance, creating an effective 60% tax rate on income in the £100,000 to £125,140 band. A large BiK can tip you into that zone even when your salary alone would not.
Is a company car 100% tax deductible for the business?
For the company, tax relief on the purchase comes through capital allowances, and it depends on the car. A new fully electric car qualifies for a 100% first-year allowance, so the whole cost is deducted from profits in year one. Petrol and diesel cars get relief far more slowly, at 14% or 6% a year, depending on emissions. Our capital allowance calculator shows the exact relief for any planned purchase.
My tax code is still wrong after I gave up a benefit. Will I get my money back?
Yes. Once HMRC learns the benefit ended, either from you directly or from your employer's year-end P11D, they recalculate the year.
Overpaid tax is refunded through your payslip if it is caught within the same tax year or by a P800 refund afterwards. You do not need to prove the exact date with paperwork; the P11D your employer files is what HMRC goes by, so the fastest fix is updating the benefit in your personal tax account yourself.