When you get a company car you can use privately, HMRC taxes it as a benefit in kind (BiK). The amount you pay hinges on two numbers: the car’s P11D value and its appropriate percentage (the BiK band, driven by CO2 emissions). Get the P11D value wrong and every figure downstream is wrong. This guide explains how the P11D value is built up and sets out the 2026/27 benefit-in-kind bands, including the electric-vehicle rate.
What the P11D Value Is
The P11D value is not what your employer paid for the car. It’s the manufacturer’s list price on the day before first registration, including extras — the figure HMRC uses as the base for the benefit charge.
P11D value = list price (including VAT and delivery) + optional accessories − capital contribution (capped at £5,000)
Let’s break that down.
List price (including VAT and delivery)
Use the published list price including VAT and any delivery/transit charges — not the discounted price your employer negotiated. Discounts, fleet deals, and trade-ins are ignored.
Optional accessories
Add the cost (including VAT and fitting) of optional accessories fitted when the car is first made available to you, whatever they cost. Accessories added later count only if the price is £100 or more (a set of items is treated as one, not split). Standard manufacturer equipment is already in the list price. Genuine equipment needed solely because of a disability is excluded.
Capital contribution (capped at £5,000)
If you pay your employer a one-off capital contribution towards the cost of the car, you deduct it from the P11D value — but only up to a maximum of £5,000 (under section 132 ITEPA 2003). Pay more than £5,000 and the excess doesn’t reduce the benefit.
Worked example of the P11D value
| Item | Amount |
|---|---|
| List price (inc. VAT and delivery) | £38,000 |
| Optional metallic paint + tech pack | £2,400 |
| Subtotal | £40,400 |
| Less capital contribution (you paid £6,000, capped at £5,000) | −£5,000 |
| P11D value | £35,400 |
The 2026/27 BiK Percentage Bands
The cash equivalent of the benefit is your P11D value × the appropriate percentage. That percentage is set by the car’s CO2 emissions (and, for plug-in hybrids, electric-only range). The maximum percentage is capped at 37%.
Electric and low-emission cars (2026/27)
| CO2 (g/km) | Electric range | 2025/26 | 2026/27 | 2027/28 |
|---|---|---|---|---|
| 0 (fully electric) | — | 3% | 4% | 5% |
| 1–50 | 130+ miles | 3% | 4% | 5% |
| 1–50 | 70–129 miles | 6% | 7% | 8% |
| 1–50 | 40–69 miles | 9% | 10% | 11% |
| 1–50 | 30–39 miles | 13% | 14% | 15% |
| 1–50 | under 30 miles | 15% | 16% | 17% |
The electric-vehicle rate is 4% in 2026/27 (up from 3% in 2025/26, rising to 5% in 2027/28). EVs remain by far the cheapest company car for BiK — but the appropriate percentage is now climbing 1 percentage point each year.
Petrol and higher-emission cars (2026/27)
For cars emitting 51 g/km or more, the percentage steps up with CO2. The bands from 75 g/km upwards are frozen for 2026/27 and 2027/28, while the bands from 51 to 74 g/km rise by a further percentage point in each of those years (the 51–54 g/km band is 17% in 2026/27 and 18% in 2027/28):
| CO2 (g/km) | Appropriate percentage |
|---|---|
| 51–54 | 17% |
| 55–59 | 18% |
| 60–64 | 19% |
| 75–79 | 21% |
| 95–99 | 25% |
| 115–119 | 29% |
| 135–139 | 33% |
| 155–159 | 37% |
| 160+ | 37% (capped) |
Each 5 g/km band adds 1 percentage point (with a one-off plateau at 70–79 g/km, where both the 70–74 and 75–79 bands sit at 21%), starting at 17% for 51–54 g/km, up to the 37% cap. The exact CO2 figure is rounded down to the nearest 5 g/km (so 188 g/km is treated as 185).
Diesel supplement
Diesel cars that don’t meet the RDE2 (Euro 6d) standard add a 4 percentage point supplement, still subject to the overall 37% cap. Most diesels registered in recent years meet RDE2 and avoid the supplement.
Putting It Together: A Full Calculation
Electric car — P11D value £35,400, 0 g/km, 2026/27:
- Benefit-in-kind = £35,400 × 4% = £1,416
- Tax for a 20% taxpayer = £1,416 × 20% = £283.20 a year
- Tax for a 40% taxpayer = £1,416 × 40% = £566.40 a year
Petrol car — same £35,400 P11D value, 120 g/km, 2026/27:
- 120 g/km → 30% appropriate percentage
- Benefit-in-kind = £35,400 × 30% = £10,620
- Tax for a 40% taxpayer = £10,620 × 40% = £4,248 a year
The contrast shows why electric company cars remain so tax-efficient: the same list price produces a benefit charge more than seven times smaller on an EV in 2026/27.
Fuel Benefit and Availability
- Fuel benefit: if your employer pays for private fuel in a petrol or diesel car, a separate fuel-benefit charge applies (a fixed multiplier × the appropriate percentage). There is no equivalent charge for electricity provided for an EV.
- Part-year availability: if the car isn’t available for the whole year (you joined mid-year, or it was off the road 30+ consecutive days), the benefit is reduced proportionately.
Key Takeaway
A company car’s P11D value is its list price including VAT and delivery, plus accessories, minus a capital contribution capped at £5,000 — not the price your employer paid. Multiply it by the 2026/27 appropriate percentage to get the taxable benefit: 4% for a fully electric car, rising in 5 g/km steps to a 37% cap for higher-emission petrol and diesel cars (plus a 4% diesel supplement where RDE2 isn’t met).
Use the company car tax calculator to model your exact bill, the P11D calculator for the full cash-equivalent figure, and the income tax calculator to see how the benefit affects your overall tax.