Company Car Tax Calculator

A company car available for private use is normally a benefit in kind (BIK). HMRC converts that benefit into a taxable cash value using the car's list price and an appropriate percentage linked to emissions. The employee pays income tax on the cash value; the employer pays Class 1A National Insurance on it.

Private use includes commuting. A genuine pool car can be exempt, but HMRC's conditions are strict: it must be shared, normally kept at business premises, and private use must be merely incidental. A car used only for business with private use prohibited may also fall outside the charge.

HMRC's 2026/27 ready reckoner gives a 4% rate for a zero-emission car. A plug-in hybrid emitting 1–50g/km uses its approved electric range: the bands are 4%, 7%, 10%, 14% or 16%. Above 50g/km, the rate rises with emissions and reaches the 37% ceiling.

Take a petrol car with a £30,000 P11D value and official emissions of 120g/km. HMRC's 2026/27 percentage is 30%, producing a £9,000 benefit before contributions. If the employee pays £500 towards private use, the calculator reduces the taxable benefit to £8,500.

At a 40% marginal tax rate, employee tax is £3,400 a year, or about £283.33 a month. Employer Class 1A NI is £1,275 because £8,500 × 15% = £1,275. Fuel provided for private use is a separate benefit and is not included in this car-only example.

The P11D price is not the amount paid. It normally starts with the manufacturer's UK list price on the day before first registration, including VAT, delivery and factory-fitted accessories. It excludes the first registration fee and vehicle excise duty. Later accessories can also affect the price used for tax under HMRC's rules.

A dealer discount, fleet rebate or cheaper lease does not reduce the list price. For a used company car, the original list price is still relevant. Employee capital contributions towards acquiring the car have separate rules and limits, so do not treat them automatically as the same thing as annual payments for private use.

A fully electric company car uses the 4% 2026/27 percentage even if its list price is high. For a plug-in hybrid, CO2 alone is not enough when emissions are 1–50g/km: HMRC also needs the approved zero-emission range. Entering the wrong range can move the car across several BIK bands.

Some diesel cars can attract a four-percentage-point supplement, subject to the overall 37% maximum, while qualifying diesels are treated without it. The registration documents or manufacturer data should identify the emissions standard. A mild hybrid is not treated as a PHEV merely because its description includes “hybrid”.

A qualifying contribution for private use can reduce the cash equivalent, but the payment must be required and actually made in the tax year. The calculator subtracts the entered contribution after applying the BIK percentage and stops at zero. Keep evidence of the agreement and payments.

The benefit may also be reduced when the car was unavailable for a qualifying period, for example before it was first provided or after it was permanently withdrawn. Brief repair periods do not always qualify. A replacement car, shared availability, employee capital contribution or mid-year change needs a time-apportioned calculation using HMRC's detailed rules.

HMRC normally collects the employee's company car tax through PAYE, either by changing the tax code or through registered payrolling of benefits. The figure on a payslip can therefore differ from a simple annual amount divided by 12, especially after a mid-year change or coding adjustment.

For 2026/27 the employer's Class 1A NI rate is 15% of the taxable benefit. It is an employer-only cost and is not deducted from employee pay. Reporting requirements depend on whether the benefit is payrolled; employers should retain the P11D value, emissions evidence, availability dates and contribution records.

Enter the £30,000 example or replace it with the car's actual P11D list price, then choose the fuel type, CO2 emissions and any PHEV electric range. The calculator applies the official 2026/27 percentage, deducts a qualifying employee contribution, and shows employee tax and 15% Class 1A NI.

Check unusual cases against HMRC guidance, particularly diesel supplements, capital contributions, shared cars, accessories and periods of unavailability. Treat the result as a planning estimate; the employer's payroll and benefit records determine the amount reported to HMRC.