Company car tax (BIK) rates 2026/27: the table in the Act, and a calculator

Company car tax is income tax on a benefit in kind. The taxable value is the car’s list price multiplied by an “appropriate percentage”, which is set by section 139 of the Income Tax (Earnings and Pensions) Act 2003 and depends on the car’s CO2 emissions — and, for plug-in hybrids, its electric range. For 2026–27 a fully electric car is at 4%; a high-emission car can reach 37%. The table below is parsed from the Act itself, and the calculator uses the same figures.

Company car tax bands 2026/27: the appropriate percentages in section 139

For cars at 75g/km or more the Act uses a formula instead of a table: “21% plus one percentage point for each 5 grams per kilometre driven by which the CO2 emissions figure exceeds 75, and b 37%.”, rounding the CO2 figure down to a multiple of 5. Worked out from that formula:

Two rounding rules matter at the edges: “if a CO2 emissions figure is not a whole number, round it down to the nearest whole number, and b if an electric range figure is not a whole number, round it up to the nearest whole number.” Electric range is defined as “the maximum distance for which the car can be driven in electric mode without recharging the battery.”

How the taxable value is worked out

Section 121 sets the steps. The ones that matter in practice: “Find the price of the car in accordance with sections 122 to 124A.” Then “Multiply the interim sum by the appropriate percentage for the car for the year.” And finally: “Make any deduction from the provisional sum under section 144 in respect of payments by the employee for the private use of the car.” GOV.UK’s summary is short: “The taxable value of a car is not the same as its cost.” It is reduced if “This value of the car is reduced if: you have it part-time you pay something towards its cost it has low CO2 emissions”.

Car fuel benefit for 2026/27

Fuel is separate: “If your employer pays for fuel you use for personal journeys, you’ll pay tax on this separately.” The charge is not the fuel actually used. Section 150 ITEPA 2003: “The cash equivalent of the benefit of the fuel is the appropriate percentage of £29,200.” The appropriate percentage is the car’s own percentage from the table above, so the fuel benefit on a car at 30% is £8,760, whatever the car’s price and however little private fuel is used. HMRC’s December 2025 notice raised the multiplier “based on the September 2025 Consumer Price Index figure.” Two consequences follow:

• Electric cars: “Electricity is not a fuel for car fuel benefit purposes.” Charging a company electric car does not create a fuel benefit.
• Low private mileage: because the charge is flat, it does not fall when an employee drives few private miles. Employers who pay only for business fuel typically reimburse it at the advisory fuel rates.

Vans have a flat fuel charge instead of a percentage: see company van tax. Where a car is provided through salary sacrifice, the 75 g/km rule on salary sacrifice car schemes decides how it is taxed.

Diesel cars

“This section applies to a diesel car first registered on or after 1 January 1998 but before 1 September 2017.” “This section applies to a diesel car first registered on or after 1 September 2017 if it does not meet the Euro 6d emissions standard.” For those cars the section adds four percentage points. The calculator above does not apply the supplement: the cap stated in the text of section 141 as we read it does not match the 37% cap in section 139, and we have not confirmed which applies, so we do not compute it.

Company car tax on electric cars

For a car with zero CO2 emissions the 2026–27 appropriate percentage in section 139 is 4%. On a £40,000 electric car that is a taxable benefit of £1,600 a year, so £320 of income tax at the basic rate and £640 at the higher rate; the employer pays Class 1A National Insurance at 15% on that benefit. Charging is not a second benefit: HMRC’s rates page says “Electricity is not a fuel for car fuel benefit purposes.” Percentages for 2027–28 onwards are not in the text of section 139 we read, so we do not state them. An electric car taken through salary sacrifice is still taxed at 4%, because the optional remuneration rule only bites above 75g/km — see salary sacrifice car schemes — and the comparison with paying a cash allowance instead is on car allowance vs company car.

Plug-in hybrids registered from 2025

GOV.UK sets out a transitional rule: “The value of your car will be based on CO2 emissions of 1g/km if all of the following apply: it was registered on or after 1 January 2025 to 5 April 2028 it has CO2 emissions of 51g/km or more on the registration certificate it has an electric range of at least 1 mile the registration certificate does not show Euro 6d-ISC-FCM or Euro 6e in the ‘Euro status’ section”

Private use, business use and pool cars

• Commuting is private: “‘Private use’ includes employees’ journeys between home and work, unless they’re travelling to a temporary place of work.”
• Business-only cars: “To be exempt, you must tell your employee not to use the vehicle for private journeys and check that they do not.”
• Pool cars: “You do not have to pay or report on ‘pool’ cars. These are cars that are shared by employees for business purposes, and normally kept on your premises.” But “You’ll have to pay if a pool car is driven for private use, or if a car is shared by employees and does not qualify as a pool car.”
• Employees’ own cars: “You do not have to pay anything on cars that directors or employees own privately.” — they are paid mileage instead, on HMRC mileage rates, and the safety duty is on grey fleet.
• Salary sacrifice: “You must report the car or fuel to HM Revenue and Customs (HMRC) if they are provided as part of a salary sacrifice arrangement.”

Company cars are among the benefits that must be payrolled from April 2027; see P11D and business travel. VAT on leasing and hire is on VAT on car hire and leasing. Percentages for years after 2026–27 are not in the text of section 139 we read, and we do not state them. This page quotes ITEPA 2003 and GOV.UK guidance as read on 2026-10-01; it is not tax advice.

Common questions