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Company car tax calculator
Company car tax is Income Tax on a benefit in kind: the car's list price times a percentage set by its CO2 emissions, 4% for an electric car and up to 37% for petrol or diesel in 2026/27. The company pays 15% Class 1A National Insurance on the same amount, and can claim capital allowances on the car.
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Example
Worked example
Tax year: 2026-27; List price (P11D value): £40,000; Fuel type: electric; Director's Income Tax rate: higher; Bought or leased: buy; New and unused: yes. Enter your own details to replace this example.
In 2026/27, a £40,000 electric company car is taxed at 4%: a benefit in kind of £1,600. A higher-rate director pays £640 Income Tax and the company £240 Class 1A National Insurance. Bought new, the company claims a £40,000 first-year allowance, saving £7,600 to £10,000 Corporation Tax (19% to 25%).
- Appropriate percentage (0 g/km, zero emission)
- 4%
- List price (P11D value)
- £40,000
- Car benefit in kind (2026/27)
- £1,600
- Director's Income Tax on the benefit (40%)
- £640
- Company's Class 1A National Insurance (15%)
- £240
- Capital allowance in the first year (100% first-year allowance)
- £40,000
- Corporation Tax saved on the car (at 19% to 25%)
- £7,600 to £10,000
- Corporation Tax saved on the car and the Class 1A (at 19% to 25%)
- £7,645.60 to £10,060
- Through the company, the director pays Income Tax on the benefit and the company pays Class 1A, and the company gets Corporation Tax relief on the car. Bought personally, there is no benefit in kind or Class 1A and no Corporation Tax relief, but the car is paid for from income that has already been taxed. This calculator doesn't compare the two.
- Without the company's profits, the Corporation Tax saved is shown at the 19% small profits rate and the 25% main rate. Enter the profits for the exact figure, including marginal relief.
- The company's year is assumed to run from 1 April to 31 March (1 April 2026 to 31 March 2027). If it doesn't, the writing-down rate may be a hybrid of 18% and 14%: use the capital allowances calculator.
- A new, unused zero-emission car bought by 31 March 2027 gets a 100% first-year allowance. When the company sells the car, the sale price comes off the main pool and can create a balancing charge, taxed as profit.
- Capital allowances are worked out on the list price because no price paid was entered. Enter the price the company paid, after any discount.
- Income Tax rates are for England, Wales and Northern Ireland. Scottish taxpayers have different bands and rates. The director pays the tax through a tax code or Self Assessment; the company reports the benefit on a P11D or through payroll.
- Not covered: cars without an approved CO2 figure or first registered before 1998, classic cars, pool cars, salary sacrifice, payments for private use, VAT, and running costs.
Sources: HMRC 480 Appendix 2: Work out the appropriate percentage for company car benefits HMRC 480 Chapter 12: How to work out the benefit of a company car (list price, capital contributions, diesel supplement, unavailable days) GOV.UK: Van benefit charge and fuel benefit charges for cars and vans for tax year 2026 to 2027 (car fuel multiplier £28,200 for 2025/26, £29,200 for 2026/27) GOV.UK: Rates and thresholds for employers 2026 to 2027 (Class 1A 15%) GOV.UK: Income Tax rates and Personal Allowances GOV.UK: Capital allowances for business cars GOV.UK: First-year allowances for zero-emission cars extended to 31 March 2027 (Corporation Tax) GOV.UK: Writing down allowances – rates and pools
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How much tax will I pay on a company car?
You pay Income Tax on the car's benefit in kind: its list price, less up to £5,000 you paid towards it, times the appropriate percentage for its CO2 emissions. In 2026/27 that is 4% for an electric car and up to 37% for petrol or diesel. A higher-rate taxpayer pays 40% of that amount each year.
The company pays Class 1A National Insurance at 15% on the same benefit. If it pays for private fuel in a petrol or diesel car, a fuel benefit is added: the car's percentage of £29,200 in 2026/27 (£28,200 in 2025/26). The benefit is reduced for months the car isn't available. HMRC: How to work out the benefit of a company car · HMRC: Taxable fuel for company cars and vans.
What are the company car tax rates for 2025/26 and 2026/27?
The percentage depends on the car's CO2 emissions and, for a plug-in hybrid with 1 to 50 g/km, its electric range. Electric cars are 3% in 2025/26 and 4% in 2026/27. Bands below 75 g/km rise by one point in 2026/27, while bands from 75 g/km stay the same. Diesel-only cars add 4%.
| CO2 emissions | 2025/26 | 2026/27 |
|---|---|---|
| 0 g/km (electric) | 3% | 4% |
| 1 to 50 g/km, electric range 130 miles or more | 3% | 4% |
| 1 to 50 g/km, electric range 70 to 129 miles | 6% | 7% |
| 1 to 50 g/km, electric range 40 to 69 miles | 9% | 10% |
| 1 to 50 g/km, electric range 30 to 39 miles | 13% | 14% |
| 1 to 50 g/km, electric range under 30 miles | 15% | 16% |
| 51 to 54 g/km | 16% | 17% |
| 55 to 59 g/km | 17% | 18% |
| 60 to 64 g/km | 18% | 19% |
| 65 to 69 g/km | 19% | 20% |
| 70 to 74 g/km | 20% | 21% |
| 75 to 79 g/km | 21% | 21% |
| 80 to 84 g/km | 22% | 22% |
| 85 to 89 g/km | 23% | 23% |
| 90 to 94 g/km | 24% | 24% |
| 95 to 99 g/km | 25% | 25% |
| 100 to 104 g/km | 26% | 26% |
| 105 to 109 g/km | 27% | 27% |
| 110 to 114 g/km | 28% | 28% |
| 115 to 119 g/km | 29% | 29% |
| 120 to 124 g/km | 30% | 30% |
| 125 to 129 g/km | 31% | 31% |
| 130 to 134 g/km | 32% | 32% |
| 135 to 139 g/km | 33% | 33% |
| 140 to 144 g/km | 34% | 34% |
| 145 to 149 g/km | 35% | 35% |
| 150 to 154 g/km | 36% | 36% |
| 155 to 159 g/km | 37% | 37% |
| 160 to 164 g/km | 37% | 37% |
| 165 to 169 g/km | 37% | 37% |
| 170 g/km and above | 37% | 37% |
Add 4% for a diesel-only car that doesn't meet the Euro 6d (RDE2) standard, up to 37%; hybrids never pay it. A plug-in hybrid first registered from 1 January 2025 under Euro 6e-bis or later, with CO2 of 51 g/km or more, is treated as 1 g/km until 5 April 2028, so it is taxed by electric range (GOV.UK: plug-in hybrid easement). Electric cars go up to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30. HMRC: Work out the appropriate percentage · GOV.UK: Future rates to 2027/28 · GOV.UK: Company car tax rates 2028 to 2030.
Electric or petrol: which costs less through a limited company?
Take a £40,000 car in 2026/27, bought new by a company paying 25%, for a higher-rate director. Electric: a £1,600 benefit, £640 Income Tax and £240 Class 1A, and a £40,000 first-year allowance. Petrol at 120 g/km: a £12,000 benefit, £4,800 tax, £1,800 Class 1A and a £2,400 allowance.
| Electric | Petrol, 120 g/km | |
|---|---|---|
| Benefit in kind | £1,600 (4%) | £12,000 (30%) |
| Director's Income Tax (40%) | £640 | £4,800 |
| Company's Class 1A National Insurance | £240 | £1,800 |
| Corporation Tax saved (allowances and Class 1A) | £10,060 | £1,050 |
Bought personally, neither car has benefit-in-kind tax or Class 1A, but there is no Corporation Tax relief, and the director pays for the car from income that has already been taxed, so the routes aren't like for like. The first-year allowance front-loads the electric car's relief; when the company sells the car, the sale price comes off its main pool and can create a balancing charge. Our guides cover the full cost of an electric car through a limited company and a company car or your own car with mileage.
How does the company get tax relief on a car?
A bought car gets capital allowances. A new, unused electric car bought by 31 March 2027 gets a 100% first-year allowance. Other cars with 50 g/km or less go into the main pool at 14% a year (18% before 1 April 2026), and cars over 50 g/km into the special rate pool at 6%.
Cars never get the annual investment allowance or full expensing. A leased car's rentals are deductible instead, but 15% is disallowed for a car with CO2 over 50 g/km on a lease starting on or after 1 April 2021. Older leases use the threshold when the lease began: 110 g/km from April 2018, 130 g/km from April 2013 and 160 g/km from April 2009. The company's Class 1A National Insurance is deductible too. GOV.UK: Capital allowances for business cars · HMRC BIM47714: car hire restriction. For the whole pool working, use the capital allowances calculator; our guide covers leasing a company car.
What doesn't this calculator cover?
It covers one car, available to one director, for one tax year. It doesn't cover cars without an approved CO2 figure or first registered before 1998, classic cars, pool cars, salary sacrifice, payments for private use, shared cars, Scottish Income Tax rates, VAT, running costs, or what happens when the car is sold.
It gives general information, not tax advice. To see the effect on the company's whole bill, use the Corporation Tax calculator. If the director owes the company money as well, try the director's loan s.455 tax calculator; for a van, the company van tax calculator. The car's capital allowances are claimed on the company's Company Tax Return (CT600).
Which rules does this calculator follow?
Every figure comes from the rules HMRC and Companies House publish on GOV.UK, and from the legislation behind them. The links below go to the pages we checked when we last reviewed this calculator, so you can read each rule in full and check that it applies to your company.
- HMRC 480 Appendix 2: Work out the appropriate percentage for company car benefits
- HMRC 480 Chapter 12: How to work out the benefit of a company car (list price, capital contributions, diesel supplement, unavailable days)
- GOV.UK: Van benefit charge and fuel benefit charges for cars and vans for tax year 2026 to 2027 (car fuel multiplier £28,200 for 2025/26, £29,200 for 2026/27)
- GOV.UK: Rates and thresholds for employers 2026 to 2027 (Class 1A 15%)
- GOV.UK: Income Tax rates and Personal Allowances
- GOV.UK: Capital allowances for business cars
- GOV.UK: First-year allowances for zero-emission cars extended to 31 March 2027 (Corporation Tax)
- GOV.UK: Writing down allowances – rates and pools
Frequently asked questions
How is an electric car bought through a limited company taxed?
The company and the director are taxed separately. A new, unused electric car bought by 31 March 2027 gets a 100% first-year allowance, so its whole cost comes off the company's taxable profits. The director's benefit in kind is 4% of the list price in 2026/27 (3% in 2025/26), with 15% Class 1A on it for the company. A petrol car over 50 g/km can be taxed at up to 37%.
How is company car tax calculated?
Take the car's list price when new, including options, and deduct up to £5,000 the director paid towards it. Multiply by the appropriate percentage for the car's CO2 emissions (and electric range for a plug-in hybrid), and reduce it for any months the car wasn't available. That is the benefit in kind. The director pays Income Tax on it at 20%, 40% or 45%, and the company pays 15% Class 1A National Insurance.
What BiK rate applies to electric cars in 2026/27?
A fully electric car is taxed at 4% of its list price in 2026/27, up from 3% in 2025/26. It rises to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30. A plug-in hybrid with CO2 of 1 to 50 g/km is taxed at 4% to 16% in 2026/27, depending on how many miles it can drive on electricity alone.
Can the company claim capital allowances on a car?
Yes, but cars never get the annual investment allowance or full expensing. A new, unused zero-emission car bought by 31 March 2027 gets a 100% first-year allowance. Other cars with CO2 of 50 g/km or less, including second-hand electric cars, go into the main pool at 14% a year from 1 April 2026 (18% before). Cars over 50 g/km go into the special rate pool at 6% a year.
Is there a fuel benefit if I pay for my own private fuel?
No. The car fuel benefit applies only when the company pays for fuel for private journeys, including commuting, and you don't repay all of it. Repay the full cost of your private fuel by 6 July after the tax year and there is no charge. Repaying part of it doesn't reduce the charge, which is the car's percentage of £29,200 in 2026/27. Charging an electric car never creates a fuel benefit.
Is a company van taxed less than a company car?
Usually. A van available for private use has a flat benefit of £4,170 in 2026/27 (£4,020 in 2025/26), whatever its price, plus £798 if the company pays for private fuel. A zero-emission van has no van benefit at all. There is no charge if private use is only commuting and insignificant journeys. Double-cab pick-ups bought from April 2025 are generally cars for capital allowances.
Related free tools
- Corporation Tax calculator: Estimates the Corporation Tax a UK limited company pays on its taxable profits for one accounting period of up to 12 months. Applies the small profits rate, the main rate and marginal relief, with associated companies, short periods and periods that straddle 1 April. A close investment-holding company pays the main rate on all its profits. Returns the tax, the effective rate and the payment and filing dates.
- Corporation Tax deadline calculator: Works out a UK private limited company's Corporation Tax payment date, CT600 filing deadline and Companies House accounts deadline from its accounting period. Accounts longer than 12 months are split into two Corporation Tax periods, each with its own payment date.
- Corporation Tax late filing penalty and interest calculator: Works out HMRC's penalties for filing a UK company's Company Tax Return (CT600) late — the flat £200/£400 penalties for filing deadlines from 1 April 2026 (£100/£200 before then), and the 10% or 20% tax-geared penalty — plus late payment interest on the Corporation Tax at HMRC's published rates.
- All free Corporation Tax tools
Last reviewed . This calculator gives general guidance, not tax advice.
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