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