How do I calculate my company car (BIK) tax?

Every car has a Benefit-in-Kind [BIK] percentage band.

This percentage band formula is based on CO2 emissions, and a P11D value, which is the list price, including extras and VAT, but without the first year registration fee and vehicle tax.

To calculate the company car - or BIK - tax, we multiply the P11D value by the BIK percentage banding, then multiply that figure by your tax band - i.e. 20%, 40% or 45%.

For the tax year 2020/21 the income tax bands are:

Basic Rate tax payers – up to £50,000 – 20%
Higher Rate tax payers – £50,001 to £150,000 – 40%
Additional Rate tax payers – Over £150,000 – 45%

The above includes the personal allowance and applies for England, Wales and Northern Ireland.

▸ Visit the HMRC Website for more information on tax bands

Useful links relating to this topic.

▸ What is BIK (benefit in kind) car tax?
▸ What are the current benefit-in-kind (BIK) company car tax bands?

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