Company Car Tax Calculator — P11D & Benefit in Kind 2026/27

The P11D value of a company car is the figure HMRC uses as the basis for calculating the Benefit in Kind tax charge. It is the manufacturer's list price of the car including VAT, any factory-fitted accessories, and the cost of delivery, but excluding the first registration fee and Vehicle Excise Duty (road tax). It is not the price you actually paid for the car — if you received a dealer discount, that does not reduce the P11D value. The list price for this purpose is fixed on the date the car was first registered, and it does not reduce over time as the car depreciates. This means an employee who has had the same company car for five years pays tax on the same P11D value in year five as they did in year one.

The BiK percentage is set by HMRC each tax year and is based primarily on the car's official CO₂ emissions figure. For 2026/27, fully electric vehicles have a BiK rate of just 4%, making them by far the most tax-efficient company car choice. Petrol and RDE2-compliant diesel cars range from 17% (for cars emitting 51–54g/km) up to 37% for the highest emitters. Non-RDE2 diesel cars attract a 4 percentage point supplement on top of the standard rate, capped at 37%. For plug-in hybrids, the rate ranges from 4% to 16% depending on the car's zero-emission electric range. The taxable benefit is calculated as: P11D value × BiK percentage. If the car is only available to the employee for part of the year, the benefit is pro-rated by the number of days available divided by 365.

Class 1A National Insurance is paid by the employer — not the employee — on most benefits in kind, including company cars. The rate for 2026/27 is 15% of the taxable benefit value (the same P11D value used for the employee's income tax calculation). Importantly, employees pay no National Insurance on benefits in kind at all — only the employer has a Class 1A liability. Class 1A NI is reported on form P11D(b) and is due to HMRC by 19 July following the end of the tax year (22 July if paying electronically). If the company payrolls its benefits, the Class 1A is still reported and paid annually on P11D(b) — payrolling changes how the employee's Income Tax is collected, not the employer's NI position.

Electric vehicles have a BiK rate of just 4% for 2026/27, compared to rates of 20–37% for typical petrol or diesel cars. This means the taxable benefit on an electric car is a fraction of an equivalent combustion engine car of the same price. For example, a £40,000 electric car generates a taxable benefit of just £1,600 — costing a 20% taxpayer only £320 in Income Tax per year, compared to over £2,000 for an equivalent petrol car. The employer also benefits from much lower Class 1A NI liability. On top of this, if the company purchases or finances the car through hire purchase, 100% First Year Allowance is available on new electric cars, allowing the full purchase cost to be deducted from taxable profit in the year of purchase. The low BiK rates for EVs are confirmed by HMRC until at least 2029/30, giving employers and employees long-term certainty.

Both methods result in the same amount of Income Tax being paid by the employee, but the timing and mechanism differ. Under the traditional P11D route, you report the benefit to HMRC after the end of the tax year on form P11D, and HMRC then adjusts the employee's tax code for the following year to collect the additional tax through payroll. This means there is often a year's delay before the correct tax is being collected, and employees can sometimes have unexpected tax adjustments. Under payrolling of benefits, you register with HMRC before the start of the tax year, then add the monthly BiK value to the employee's payslip so tax is collected in real time throughout the year. The employee does not receive a P11D form and there are no end-of-year adjustments. Payrolling is generally considered simpler and fairer for employees and is increasingly the preferred approach.