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).
Since 2020, company cars that produce zero emissions have offered drivers low Benefit-in-Kind (BiK) rates.
All company cars registered on or after April 6, 2020, maintain a 2% BiK rate for the remainder of the tax year (2024-2025), allowing employees to pay a very minimal amount of company car tax while enjoying the benefits of driving an all-electric car.
However, starting in 2025, this rate is set to increase by 1% each year until 2028.
Prior to the Autumn Budget 2024 presentation, there was uncertainty about how Benefit-in-Kind would evolve after 2028. Fortunately, the Government has established Company Car Tax rates for 2028-2029 and 2029-2030.
Key changes include:
For a detailed overview of BiK rates by year, please refer to our BiK rate table.
With the UK Government now confirming the Benefit-in-Kind rates beyond 2028, we can evaluate the effects on company car drivers.
The taxable benefit-in-kind is determined as a percentage of the car's UK list price (P11D), with the percentage varying based on the car's CO2 emissions measured in grams per kilometre (g/km).
One of the key tax benefits of opting for an electric company car in the UK is the significantly low Benefit-in-Kind (BIK) rate that employees are required to pay.
To calculate the BIK, use the following formula:
P11D X BIK percentage = Taxable benefit x Tax Rate = Tax for the entire tax year / 12 = your monthly expense.
Examples
Volkswagen ID.4 210kW Match Pro 77kWh 5dr Auto | Electric
P11D Value = £44,305
Co2 Emissions = 0g/km
BIK Rates:
| 2024/2025 | 2025/2026 | 2026/2027 | 2027/2028 | 2028/2029 | 2029/2030 | |
| BIK % | 2% | 3% | 4% | 5% | 7% | 9% |
| Taxable Benefit | £886.10 | £1,329.15 | £1,772.20 | £2,215.25 | £3,101.35 | £3,987.45 |
| 20% Tax Payer |
||||||
| Annual | £177.24 | £265.83 | £354.44 | £443.05 | £620.27 | £797.49 |
| Monthly | £14.77 | £22.15 | £29.54 | £36.92 | £51.69 | £66.46 |
| 40% Tax Payer |
||||||
| Annual | £354.44 | £531.66 | £708.88 | £886.10 | £1,240.54 | £1,594.98 |
| Monthly | £29.54 | £44.31 | £59.07 | £73.84 | £103.38 | £132.92 |
Tiguan Match 1.5 TSI eHybrid 204PS 6-Speed DSG 5 Door | Petrol Plug-in Hybrid
P11D Value = £42,645
Co2 Emissions = 9g/km
EV Range = 76miles
BIK Rates:
| 2024/2025 | 2025/2026 | 2026/2027 | 2027/2028 | 2028/2029 | 2029/2030 | |
| BIK % | 5% | 6% | 7% | 8% | 18% | 19% |
| Taxable Benefit | £2,132.25 | £2,558.70 | £2,985.15 | £3,411.60 | £7,676.10 | £8,102.55 |
| 20% Tax Payer |
||||||
| Annual | £426.45 | £511.74 | £597.03 | £682.32 | £1,535.22 | £1,620.51 |
| Monthly | £35.54 | £42.65 | £49.75 | £56.86 | £127.94 | £135.04 |
| 40% Tax Payer |
||||||
| Annual | £852.90 | £1023.48 | £1,194.06 | £1,364.64 | £3,070.44 | £3,241.02 |
| Monthly | £71.08 | £85.29 | £99.51 | £113.72 | £255.87 | £270.09 |
Volkswagen Tiguan R-Line 1.5 eTSI 150PS 7-Speed DSG 5 Door | Petrol
P11D Value = £39,380
Co2 Emissions = 147g/km
BIK Rates:
| 2024/2025 | 2025/2026 | 2026/2027 | 2027/2028 | 2028/2029 | 2029/2030 | |
| BIK % | 34% | 35% | 36% | 37% | 38% | 39% |
| Taxable Benefit | £13,389.20 | £13,783 | £14,176.80 | £14,570.60 | £14,964.40 | £15,358.20 |
| 20% Tax Payer |
||||||
| Annual | £2,677.84 | £2,756.60 | £2,835.36 | £2,914.14 | £2,992.88 | £3,071.64 |
| Monthly | £223.15 | £229.72 | £236.28 | £242.84 | £249.41 | £255.97 |
| 40% Tax Payer |
||||||
| Annual | £5,355.68 | £5,513.20 | £5,670.72 | £5,828.24 | £5,985.76 | £6,143.28 |
| Monthly | £446.31 | £459.43 | £472.56 | £485.69 | £498.81 | £511.94 |
Tiguan Allspace Elegance 2.0 TDI 150PS 7-Speed DSG 5 Door| Diesel
P11D Value = £43,870
Co2 Emissions = 160g/km
BIK Rates:
| 2024/2025 | 2025/2026 | 2026/2027 | 2027/2028 | 2028/2029 | 2029/2030 | |
| BIK % | 37% | 37% | 37% | 37% | 38% | 39% |
| Taxable Benefit | £16,231.90 | £16,231.90 | £16,231.90 | £16,231.90 | £16,670.60 | £17,109.30 |
| 20% Tax Payer |
||||||
| Annual | £3,246.38 | £3,246.38 | £3,246.38 | £3,246.38 | £3,334.12 | £3,421.86 |
| Monthly | £270.53 | £270.53 | £270.53 | £270.53 | £277.84 | £285.16 |
| 40% Tax Payer |
||||||
| Annual | £6,492.76 | £6,492.76 | £6,492.76 | £6,492.76 | £6,668.24 | £6,843.72 |
| Monthly | £541.06 | £541.06 | £541.06 | £541.06 | £555.69 | £570.31 |
Comparison
| EV | Petrol Plug in Hybrid | Petrol | Diesel | |
|
|
Tiguan Match 1.5 TSI eHybrid 204PS 6-Speed DSG 5 Door |
Volkswagen Tiguan R-Line 1.5 eTSI 150PS 7-Speed DSG 5 Door | Tiguan Allspace Elegance 2.0 TDI 150PS 7-Speed DSG 5 Door | |
| P11D Value | £44,305 | £42,645 | £39,380 | £43,870 |
| CO2 Emissions (g/km) | 0 | 9 | 147 | 160 |
| 2024 / 2025 |
||||
| 20% Tax Payer (Monthly) | £14.77 | £35.54 | £223.15 | £270.53 |
| 40% Tax Payer (Monthly)Monthly | £29.54 | £71.08 | £446.1 | £541.06 |
| 2029 / 2030 |
||||
| 20% Tax Payer (Monthly)Monthly | £66.46 | £135.04 | £255.97 | £285.16 |
| 40% Tax Payer (Monthly)Monthly | £132.92 | £270.09 | £511.94 |
£570.31 |
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 Autumn Budget 2024 confirms that the Van Benefit Charge will be adjusted from 6 April 2025.
