HMRC consider Company Cars or Vans that are used for personal journeys as a non cash benefit. Therefore, should your employer provide you with a car or van which you use for personal journeys, or you opt into a salary sacrifice scheme, you will pay Company Car Tax, often referred to as Benefit in Kind (BIK).
The taxable benefit-in-kind is calculated as a percentage of the car’s UK list price. The percentage depends on the car’s CO2 emissions in grams per kilometre (g/km).
One of the most significant tax advantages of choosing an electric company car in the UK is the low benefit in kind (BIK) rate that employees pay. For the 2024 tax year, the BIK rate for electric cars is set at 2%. From 2025, this is scheduled to increase by 1% each subsequent year until it reaches 5% in the 2027/28 tax year.
Below shows the breakdown for the 2024-2025 Tax Year:
| CO2 Emissions (g/km) | EV Range (miles) | Appropriate Percentage * 2024 -2025 |
| N/A | 2% | |
| 1-50 | More than 130 | 2% |
| 70-129 | 5% | |
| 40-69 | 8% | |
| 30-39 | 12% | |
| Less than 30 | 14% | |
| 51-54 | N/A | 15% |
| Over 54 | N/A | + 1% for every 5g/km up to 37% |
*Add 4% for diesels up to a maximum of 37% (unless RDE2 compliant). Diesel plug-in hybrids are classed as alternative fuel vehicles, so the 4% diesel supplement does not apply to these vehicles irrespective of RDE2 compliance.
Click to view our detailed BIK rates table
To calculate the BIK you will pay, use the formula:
P11D X BIK percentage = Taxable benefit x Tax Rate = Tax for the full tax year / 12 = monthly cost to you.
Examples
| EV | Petrol | Diesel | |
|
|
Volkswagen ID.4 125kW Match Pure 52kWh 5dr Auto |
Volkswagen Tiguan 1.5 eTSI 130PS 7-Speed DSG 5 Door | Volkswagen Tiguan Life 2.0 TDI 150PS 7-Speed DSG 5 Door |
| P11D Value | £42,858 | £33,760 | £37,595 |
| CO2 Emissions (g/km) | 0 | 139 | 141 |
| BIK % | 2% | 32% | 33% |
| Taxable Benefit | £857.16 | £10,803.2 | £12,406.35 |
| 20% Tax Payer |
|||
| Annual | £171.43 | £2160.64 | £2,481.27 |
| Monthly | £14.28 | £180.05 | £206.77 |
| 40% Tax Payer |
|||
| Annual | £342.86 | £4321.28 | £4962.54 |
| Monthly | £28.57 | £360.10 | £413.55 |
In the Autumn Budget, the Government has established Company Car Tax rates for 2028-2029 and 2029-2030, which will rise by 2 percentage points each year, reaching 9% by 2029-2030.
How do the new BIK rates compare?
Should you be provided with a company van, that you can use for personal journeys you will pay whats known at the Van Benefit Charge. This is similar to BIK, but does not factor in CO2 emissions. Instead, the Goverment set a flat rate, known as the 'Van Benefit Charge'.
Van Benefit Charge 2024 - 2025: £3960
The tax cost is calculated:
VBC X Employees Tax Rate =Annual Total
Zero-emission vans
In 204-2025, zero-emission vans have a benefit value of £0.
The van benefit charge is reduced to nil if there is only insignificant private use, the terms under which the van is made available to an employee restrict its private use or it is a pooled van.
The van benefit charge is reduced if the van is not used for the whole tax year, or, if someone else also uses the van for private travel or if something is paid by the employee for using the van privately.
