What are the BIK Rates for Company Car Tax
BIK or benefit in kind rates are used by HMRC to work out the income tax payable on a company car benefit.
The BIK rates are based on CO2 emissions and the government incentivises choosing a more environmentally friendly car by giving them a lower BIK rate.
With less tax being paid for cars with lower CO2 emissions it’s worth checking the BIK rates before committing to a company so you are comfortable with the amount of tax you will pay.
The government communicates with car manufacturers regularly to provide up to date emission data and changes the BIK rates accordingly.
BIK rates for petrol and hybrid powered cars
| CO2 emissions (grams per km) | Electric mileage range | NEDC % | WLTP % |
|---|---|---|---|
| 0 | — | 2 | 2 |
| 1 to 50 | 130 and above | 2 | 2 |
| 1 to 50 | 70 to 129 | 5 | 5 |
| 1 to 50 | 40 to 69 | 8 | 8 |
| 1 to 50 | 30 to 39 | 12 | 12 |
| 1 to 50 | less than 30 | 14 | 14 |
| 51 to 54 | — | 15 | 15 |
| 55 to 59 | — | 16 | 16 |
| 60 to 64 | — | 17 | 17 |
| 65 to 69 | — | 18 | 18 |
| 70 to 74 | — | 19 | 19 |
| 75 to 79 | — | 20 | 20 |
| 80 to 84 | — | 21 | 21 |
| 85 to 89 | — | 22 | 22 |
| 90 to 94 | — | 23 | 23 |
| 95 to 99 | — | 24 | 24 |
| 100 to 104 | — | 25 | 25 |
| 105 to 109 | — | 26 | 26 |
| 110 to 114 | — | 27 | 27 |
| 115 to 119 | — | 28 | 28 |
| 120 to 124 | — | 29 | 29 |
| 125 to 129 | — | 30 | 30 |
| 130 to 134 | — | 31 | 31 |
| 135 to 139 | — | 32 | 32 |
| 140 to 144 | — | 33 | 33 |
| 145 to 149 | — | 34 | 34 |
| 150 to 154 | — | 35 | 35 |
| 155 to 159 | — | 36 | 36 |
| 160 to 164 | — | 37 | 37 |
| 165 to 169 | — | 37 | 37 |
| 170 and above | — | 37 | 37 |
HMRC has stated that the current BIK rates will remain in place until the 2024 to 2025 tax year which ends on the 5 April 2025.
The UK government uses information provided by the NEDC and WLTP to help produce the company car BIK rates.
NEDC stands for New European Driving Cycle and WLTP stands for Worldwide Harmonised Light Vehicle Test Procedure.
What is the BIK rate for electric cars?
Up to the 5 April 2025 the BIK rate for electric vehicles is set at 2%. From the start of the 2025/2026 tax year (April 6 2025) the rate will go up by 1% annually over the next three years (i.e., 3% in 2025/26; 4% in 2026/27; and 5% in 2027/28).
How do I calculate the BIK rate for my company car?
The BIK rate % is used as part of the calculation to work out how much company car tax you should pay.
In addition to the BIK rate you will need to know:
- P11D value of your car which is the list price of your company car including VAT and delivery charge but it does not include the first year registration fee and vehicle tax.
- The rate at which you pay income tax which will be at one or more of the following: 20% (basic rate), 40% (higher rate) or 45% (additional rate).
The benefit in kind value is worked out by:
BIK rate % x P11D car value x your income tax band = Company car tax payable.
What about company van tax?
To encourage the uptake of electric company vans the government have reduced the benefit in kind value of electric vans to zero.
In addition there is no benefit in kind charge if you use an electric company van for personal use.
Why are BIK rates important?
All taxable company benefits need to be assessed in value so that HMRC can accurately calculate the tax due.
While some employee perks have a set value like a health scheme, car benefits are taxed based on the ‘use’ of the vehicle, which means their valuation is handled differently from other company benefits.
Understanding how much tax will be deducted from your salary because of a company car benefit is important to avoid an unexpected drop in your take home pay.
How does HMRC tax my company car benefit?
There are two main ways for paying company car tax, and it is crucial to verify with your employer which method applies to you so you know what to expect.
- Not payrolled: If your company car is not payrolled then it would be shown as a deduction in the code to collect the tax.
HMRC collects your company car tax by issuing an amended tax code, which reduces your personal tax-free allowance due to the company car benefit in kind.
If the tax is not collected through your tax code during the year the benefit is received, it may result in an underpayment of tax that will be due in the following tax year.
- Payrolling: Usually through a company car salary sacrifice scheme and means that the tax is directly taken from your salary by your employer, and you will not need to notify HMRC.
If payrolling then the car benefit in kind is added to the salary and taxed and would not then be shown as a deduction in your tax code.
BIK rates and your P11D
A P11D is the form HMRC uses to administer company benefits received by PAYE employees and includes company cars.
Your P11D is essential because it tells HMRC how much company car tax needs to be deducted from your salary.
The BIK rate is used to calculate the value of the company car benefit entered on your P11D which is given to you by your employer after the end of each tax year.
