Company car
How much tax does a company car cost, and why?
A company car you can use privately is taxed as if a share of its list price were extra pay every year. The share depends on the car’s CO2 emissions and fuel type, from 4% for an electric car up to 37%. The figure goes on your P11D and comes off your tax-free allowances, so it shows up as a smaller number in your tax code. Put in the car’s details and we show the working.
How the charge is built
1. Start with the list price
Not what your employer paid: the manufacturer’s list price when new, including VAT, delivery and any extras, less up to £5,000 you contributed towards the car yourself.
2. Apply the CO2 percentage
Zero-emission cars are at 4% in 2026/27, rising a point a year. Plug-in hybrids under 51 g/km are set by their electric range. From 51 g/km the rate starts at 17% and climbs one point for every 5 g/km, up to 37%. Diesels that miss the RDE2 standard add 4%.
3. Reduce it for part years and payments
If you had the car for only part of the year, the benefit is scaled down. Anything you pay your employer for private use comes off too. A capital contribution reduces the price; a private use payment reduces the benefit.
4. Fuel is a separate charge
If your employer pays for any private fuel, a second benefit applies: a fixed figure (£29,200 in 2026/27) times the same percentage. Paying back part of your private fuel does not reduce it; only paying back all of it does.
Work out your car benefit
Copy the details from the car’s paperwork or your P11D. The list price and CO2 figure are on the V5C and the manufacturer’s specification.
Your car
The P11D value, not what was paid. Extras go in the next box.
Only the first £5,000 counts.
On the V5C or the manufacturer’s figures. Enter 0 for a pure electric car.
Worth knowing
Free fuel is rarely worth it
The fuel benefit is the same whether you drive 500 private miles or 15,000. At the higher rate the tax on it is often more than the fuel is worth. Paying for your own private fuel and claiming business mileage from your employer usually wins.
Electric cars stay cheap, for now
The percentage for a zero-emission car rises one point a year and is published years ahead, so a car chosen today costs a little more each April. Charging at home paid by the employer is exempt; a card for public chargers used privately is not.
Tell HMRC when the car changes
Your employer reports changes, but the code often lags. A newer, dearer car left on the old figure means an underpayment at the year end. Check the car benefit line on any new coding notice against this calculator.
Percentages for 2026/27
| CO2 (g/km) | Electric range | Percentage |
|---|---|---|
| 0 (electric) | Any | 4% |
| 1 to 50 | 130 miles or more | 4% |
| 1 to 50 | 70 to 129 miles | 7% |
| 1 to 50 | 40 to 69 miles | 10% |
| 1 to 50 | 30 to 39 miles | 14% |
| 1 to 50 | Under 30 miles | 16% |
| 51 to 54 | Any | 17% |
| 55 to 59 | Any | 18% |
| 60 to 64 | Any | 19% |
| 65 to 69 | Any | 20% |
| 70 to 74 | Any | 21% |
| 75 to 79 | Any | 22% |
| 80 to 84 | Any | 23% |
| 85 to 89 | Any | 24% |
| 90 to 94 | Any | 25% |
| 95 to 99 | Any | 26% |
| 100 to 104 | Any | 27% |
| 105 to 109 | Any | 28% |
| 110 to 114 | Any | 29% |
| 115 to 119 | Any | 30% |
| 120 to 124 | Any | 31% |
| 125 to 129 | Any | 32% |
| 130 to 134 | Any | 33% |
| 135 to 139 | Any | 34% |
| 140 to 144 | Any | 35% |
| 145 to 149 | Any | 36% |
| 150 to 154 | Any | 37% |
| 155 to 159 | Any | 37% |
| 160 and above | Any | 37% |
Diesel cars that are not RDE2 compliant add 4%, up to the 37% maximum.