Calculating your Benefit-In-Kind (BIK) tax
If you drive a company car, you may be liable to pay a Benefit-In-Kind (BIK) tax, also known as a "company car tax".The amount you're required to pay will depend on factors including the price of your vehicle (its P11D value), your vehicle's CO2 emissions, electric-only mileage range, and your annual earnings.
Fuel type considerations
The UK government has introduced low BIK rates for Pure Electric and Plug-in Hybrid vehicles.
While modern diesel engines are among the cleanest and most efficient engines available, in the UK most diesel vehicles incur a 4% BIK surcharge added over petrol models with similar CO2 emissions.
However, RDE2 compliant diesel vehicles (which started arriving in the UK in 2019) are exempt from this charge.
The CO2 emissions values supplied when you order your vehicle are only indicative - the actual values are only confirmed on the V5 and vehicle’s Certificate of Conformity. BIK rates change year-on-year, so you need to check if your tax calculations need adjusting each year.
How BIK is calculated
The total company car tax you pay depends on your annual salary.
If you qualify for the 20% income tax bracket, you pay 20% of: the car's P11D value multiplied by the appropriate BIK %. If you're in a higher income tax bracket, you pay 40% or 45%. Please note, tax rates differ in Scotland.
The total amount will be reflected in your Tax Code and deducted from your monthly salary.