Company Car Tax Calculator 2026/27

When your employer provides you with a car for personal use — including commuting — HMRC treats it as a taxable benefit, commonly called a "Benefit in Kind" or BIK. Rather than taxing you on the full value of the car, HMRC taxes you on a percentage of its P11D value, which is the car's list price including VAT, delivery and any factory-fitted options, minus the first registration fee and road tax.

That percentage — the BIK rate — is set by HMRC according to the car's CO2 emissions per kilometre, with electric and low-emission cars taxed far more lightly than higher-emission petrol and diesel models. The formula in full is: P11D value × BIK percentage = taxable benefit, and then taxable benefit × your marginal Income Tax rate = the tax you actually pay, usually collected automatically through your tax code rather than as a separate bill.

For 2026/27, HMRC's confirmed BIK bands run from 4% for fully electric cars, through a sliding scale for plug-in hybrids based on their electric-only range, up to a flat 37% cap for the highest-emission petrol and diesel vehicles. These bands are frozen for both 2026/27 and 2027/28 for cars above 74g/km, giving fleet managers and employees some rare multi-year certainty after several years of annual increases.

These are HMRC's confirmed rates for the 2026/27 tax year. Diesel cars that don't meet the RDE2 (Euro 6d) emissions standard add a 4 percentage point supplement on top of these figures, capped at the overall 37% maximum.

Every 5g/km band above 60g/km adds one percentage point, right up to the 37% cap reached at 155g/km. This calculator applies HMRC's exact published table rather than an approximation, so bands like 70–74g/km and 75–79g/km — both set at 21% — are handled precisely.

If your employer also pays for fuel you use on personal journeys — including your commute — a separate car fuel benefit charge applies, calculated as a fixed multiplier (£29,200 for 2026/27) multiplied by the same BIK percentage as your car, then taxed at your marginal Income Tax rate. Because the multiplier is fixed regardless of your car's actual value, the fuel benefit is often poor value unless your private mileage is very high — many employees are better off paying for their own private fuel and claiming business mileage separately.

On the employer side, the cost isn't limited to providing the car. Employers pay Class 1A National Insurance at 15% on the taxable value of both the car benefit and any fuel benefit, reported annually on the P11D(b) form and paid by 19 July (22 July if paying electronically) following the end of the tax year. This is a real cost to the business on top of the car itself, and is one reason many employers have shifted toward salary sacrifice EV schemes, where the low 4% BIK rate on electric cars keeps both the employee's tax and the employer's NI bill relatively small.

For company van drivers rather than car drivers, a different, simpler flat-rate system applies instead of the CO2-based BIK bands — the van benefit charge is a fixed amount (up to £4,170 for 2026/27) rather than a percentage of list price, with a separate flat van fuel benefit charge if private fuel is also provided.