Company Car Tax (BiK) Calculator for Electric Cars

How much company car tax will you pay on an electric car?

The answer is: considerably less than on a petrol or diesel car, and less than on many plug-in hybrids. In 2026-27, the Benefit in Kind (BiK) rate for a fully electric car is 4% of the car’s P11D value. For a petrol car emitting 120g/km CO2, the equivalent rate is 29%. That difference in BiK percentage is the reason electric company cars are so financially attractive to drivers who receive one.

Use the calculator above to enter your car’s P11D value and your income tax band. It will show your annual and monthly BiK tax bill for 2026-27, and project forward to 2029-30 so you can plan for rising rates over a three or four-year company car cycle.

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What is Benefit in Kind tax and how is it calculated?

When your employer provides you with a company car, HMRC treats the right to use that car as a taxable employment benefit. The “benefit in kind” is added to your taxable income, and you pay income tax on it at your marginal rate.

The formula is:

Annual BiK tax = P11D value × BiK percentage × income tax rate

The P11D value is the car’s manufacturer list price including VAT, options and delivery charges. It excludes the first registration fee and road tax. For most cars, the P11D is close to the on-the-road price but slightly lower.

The BiK percentage is set by HMRC and is based on the car’s CO2 emissions. Electric cars have the lowest BiK percentage of any fuel type because their tailpipe emissions are zero.

Worked example for 2026-27:

Tesla Model 3 Long Range, P11D value £47,990

• Electric car BiK rate: 4%
• Taxable benefit: £47,990 × 4% = £1,920 per year
• Basic-rate taxpayer (20%): pays £384 per year (£32 per month)
• Higher-rate taxpayer (40%): pays £768 per year (£64 per month)

Equivalent petrol car, same P11D, 120g/km CO2 (2026-27 rate: 29%):

• Taxable benefit: £47,990 × 29% = £13,917 per year
• Basic-rate taxpayer: pays £2,783 per year (£232 per month)
• Higher-rate taxpayer: pays £5,567 per year (£464 per month)

The higher-rate taxpayer saves £400 per month in BiK tax alone by choosing the electric car over the petrol equivalent. Over a four-year company car cycle, that is £19,200 in tax saved.

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Results table: BiK tax by P11D value and tax band, 2026-27

P11D value	BiK rate (EV)	Basic rate (20%) annual	Higher rate (40%) annual	Petrol at 29% BiK, basic rate	Petrol at 29% BiK, higher rate
£25,000	4%	£200 (£17/mo)	£400 (£33/mo)	£1,450 (£121/mo)	£2,900 (£242/mo)
£35,000	4%	£280 (£23/mo)	£560 (£47/mo)	£2,030 (£169/mo)	£4,060 (£338/mo)
£45,000	4%	£360 (£30/mo)	£720 (£60/mo)	£2,610 (£218/mo)	£5,220 (£435/mo)
£55,000	4%	£440 (£37/mo)	£880 (£73/mo)	£3,190 (£266/mo)	£6,380 (£532/mo)
£70,000	4%	£560 (£47/mo)	£1,120 (£93/mo)	£4,060 (£338/mo)	£8,120 (£677/mo)

Petrol comparison uses 120g/km CO2, 2026-27 BiK rate of 29%. Your P11D and personal figures appear in the calculator above.

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EV BiK rates: 2025-26 through to 2029-30

HMRC has published the EV BiK rates up to 2029-30, giving company car drivers visibility across a full four-year cycle. The rates are rising, but remain far below petrol and diesel throughout this period.

Tax year	EV BiK rate	PHEV (1-50g, 130+ mile range)	Petrol (101-110g/km)	Petrol (121-130g/km)
2025-26	3%	5%	27%	29%
2026-27	4%	6%	28%	30%
2027-28	5%	7%	29%	31%
2028-29	7%	18%	30%	32%
2029-30	9%	18%	31%	33%

Two things stand out in this table. First, the EV rate rises from 3% to 9% over five years: that is a tripling of the BiK rate. Second, even at 9% in 2029-30, the EV rate is still roughly one-third of a petrol car’s BiK rate at a comparable CO2 level. The advantage narrows but does not disappear.

The PHEV column shows a significant jump in 2028-29, when all PHEVs above 1g/km CO2 move to a flat 18% rate regardless of their electric-only range. This ends the previous system that rewarded longer-range PHEVs with lower BiK rates. If you are considering a PHEV company car starting in 2026 or 2027, be aware that by the final year of a four-year term, the BiK rate will have jumped to 18%.

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How does the P11D value affect your tax bill across a fleet cycle?

If your company car is renewed on a three or four-year cycle, your BiK calculation changes in two ways: the rate goes up each April, and the P11D value is fixed to the car’s original list price for the duration of the cycle, not to the current market value.

This means a car bought in April 2026 with a P11D of £45,000 will be taxed on that £45,000 all the way through to April 2030, even though the car is worth considerably less by then. The rising BiK rate does increase your annual tax bill year on year even on the same car, so it is worth calculating the full-cycle cost, not just the first year.

Full four-year cycle for a higher-rate taxpayer, P11D £45,000:

Tax year	BiK rate	Annual BiK tax (40%)	Monthly BiK tax
2026-27	4%	£720	£60
2027-28	5%	£900	£75
2028-29	7%	£1,260	£105
2029-30	9%	£1,620	£135
Total over 4 years		£4,500

For the same car as a petrol equivalent (P11D £45,000, 120g/km CO2, rates rising by 1% per year):

Tax year	BiK rate	Annual BiK tax (40%)	Monthly BiK tax
2026-27	29%	£5,220	£435
2027-28	30%	£5,400	£450
2028-29	31%	£5,580	£465
2029-30	32%	£5,760	£480
Total over 4 years		£21,960

Total BiK tax over four years: £4,500 for the electric car versus £21,960 for the petrol equivalent. The electric car driver pays £17,460 less in BiK tax over the same cycle. For a higher-rate taxpayer, this is one of the most significant financial advantages of choosing an electric company car.

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What the common mistake is: confusing list price with P11D

The most frequent error when calculating company car tax is using the on-the-road retail price rather than the P11D value. These are close but not identical.

The P11D value includes:

• Vehicle list price (manufacturer’s recommended retail price including VAT)
• Factory-fitted options
• Delivery charges

The P11D value excludes:

• First year Vehicle Excise Duty (road tax)
• First registration fee

For most new cars, the difference is around £600 to £1,000. Using the wrong figure gives a slightly inflated BiK tax calculation. Your employer’s fleet department, the car manufacturer or your salary sacrifice provider will have the correct P11D figure for any specific vehicle.

For used company cars, the P11D value is the car’s original list price when new, not the current market value. A three-year-old Tesla Model 3 with a current market value of £28,000 might have had a P11D of £47,990 when new, and it is that original figure that determines your BiK tax.

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Does your employer pay anything extra for providing an electric company car?

Yes. Employers pay Class 1A National Insurance on the taxable benefit. The rate is 15% of the taxable benefit value from April 2026 (it rose from 13.8% in April 2025).

For an electric car with a £40,000 P11D and a 4% BiK rate, the taxable benefit is £1,600. The employer pays 15% × £1,600 = £240 per year in Class 1A NI.

For a petrol car at the same P11D and a 29% BiK rate, the taxable benefit is £11,600. The employer pays 15% × £11,600 = £1,740 per year in Class 1A NI.

This employer NI saving of £1,500 per year per car is one of the reasons fleet managers and HR departments actively encourage employees to choose electric cars on company schemes. The employer benefits directly from the low EV BiK rate, not just the employee.

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Charging at home in a company car: the Advisory Electricity Rate

If you charge your company car at home and your employer reimburses the electricity cost, that reimbursement is not a taxable benefit provided it does not exceed HMRC’s Advisory Electricity Rate (AER). For 2026-27, the AER is 7 pence per mile.

Your employer can pay you up to 7p per mile for business mileage in your company electric car without you paying income tax on the reimbursement. If your employer pays more than 7p per mile, the excess is taxable.

If you pay for business charging out of your own pocket and your employer does not reimburse you at all, you can claim mileage allowance relief of 45p per mile for the first 10,000 miles and 25p per mile thereafter (the approved Mileage Allowance Payment rates, which apply to all cars including EVs).

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What to do with these numbers

If you are comparing a company car offer against a cash alternative (where your employer gives you a monthly car allowance instead of a car), the BiK tax calculation is central to that decision. The lower the BiK rate, the more attractive the company car is versus the cash allowance, because the tax cost of having the car provided is low.

For an electric car at 4% BiK, the annual BiK tax for a higher-rate taxpayer on a £40,000 P11D car is just £640. If your employer’s cash alternative is less than, say, £800 per month, the company car is likely the better deal once you account for what the cash alternative actually buys you (a similar car leased privately, plus insurance, servicing and the rest, all paid from post-tax income).

To model the salary sacrifice route, where you pay from gross rather than net income and get additional income tax and NI savings, use our EV salary sacrifice savings calculator.

For the full context on company cars, fleet policy, cash allowances and how employers structure EV schemes, see our guide to company cars, salary sacrifice and fleet. To see which specific cars are most cost-effective within a company car or salary sacrifice arrangement in 2026, our best electric cars for salary sacrifice page ranks the current market by net monthly cost across tax bands.

The BiK advantage for electric cars is the most powerful financial incentive currently available to UK company car drivers. At 4% in 2026-27 versus 29-37% for petrol equivalents, the difference in monthly tax is measured in hundreds of pounds, not tens.