Company car tax calculator

1. Take the car's list price when new, including VAT, delivery charges and optional extras. The first registration fee and road tax are left out. This is the P11D value. Any discount your employer negotiated makes no difference.
2. Multiply it by the appropriate percentage for the car's CO2 emissions and, for a plug-in hybrid, its electric range. The result is the taxable benefit, also called the cash equivalent.
3. The benefit is added to your other income and taxed at your highest rate: 20%, 40% or 45% in England, Wales and Northern Ireland, or at Scottish rates if you live in Scotland.

A £40,000 petrol car emitting 130g/km is taxed at 32%, a benefit of £12,800. A higher rate taxpayer pays £5,120 a year for it, about £426.67 a month. HMRC usually collects the tax by lowering your tax code, so it comes out of every payslip. Some employers add the benefit to payroll instead, which has the same effect.

Electric cars and plug-in hybrids with CO2 of 1 to 50g/km:

Every other car is taxed on its CO2 emissions alone:

Rates for later years are already set, and the electric and plug-in hybrid rates rise each year to 2029/30. The EV salary sacrifice calculator lists them, which is worth checking before you choose a car for a three or four year lease.

A plug-in hybrid with CO2 of 1 to 50g/km is taxed on its electric range: how far it can travel on battery power alone, shown as the zero emission mileage on its certificate of conformity. The bands run from 4% for 130 miles or more to 16% for under 30 miles, so two hybrids with the same list price can carry very different benefits. Your leasing company or fleet manager can confirm the figure.

Newer plug-in hybrids tested to the latest Euro standard often show more than 50g/km. GOV.UK says such a car is taxed as if it emits 1g/km, so its electric range sets the rate, when all of these apply: it was registered between 1 January 2025 and 5 April 2028, its registration certificate shows CO2 of 51g/km or more, it has an electric range of at least 1 mile, and the certificate does not show Euro 6d-ISC-FCM or Euro 6e as its Euro status. Choose the 2025 registration option in the calculator if that describes your car.

Diesel cars that meet the Real Driving Emissions 2 standard, also called Euro 6d, are taxed at the same rates as petrol cars. Other diesels pay a 4% supplement on top, up to the 37% maximum. A diesel emitting 140g/km that does not meet RDE2 is taxed at 37% of its list price, against 34% for a petrol car with the same emissions. Your car's V5C or the leasing company can tell you which standard it meets.

• A capital contribution. Money you pay towards buying the car comes off the list price used for tax, up to £5,000.
• Paying for private use. A regular amount you pay your employer as a condition of using the car privately comes off the benefit pound for pound.
• Time without the car. The benefit is cut for any part of the year the car was unavailable, for example if you got it partway through the year or it was off the road for 30 days or more in a row.

Business mileage makes no difference. A car available for private use, which includes commuting to your normal workplace, is taxed the same whether you drive 2,000 miles a year or 30,000.

If your employer pays for fuel you use on private journeys, including commuting, you also pay tax on a separate fuel benefit, worked out from a fixed annual figure multiplied by the car's percentage. For drivers with little private mileage it can cost more than the fuel is worth. Electricity does not count as fuel for this charge, so an electric car has no fuel benefit, and charging it at work is tax-free.

Your employer pays Class 1A National Insurance of 15% on the benefit: £240 a year on the £40,000 electric car and £1,920 on the 130g/km petrol car. You pay no National Insurance on a company car benefit. The employer NI calculator shows the full cost of an employee.

A cash car allowance is taxed as salary, so you pay income tax and employee National Insurance on it and your employer pays 15% NI on top. A company car is taxed only through its benefit in kind. For an electric car that benefit is small, so a company car usually costs far less in tax than an allowance big enough to run a similar car. For a petrol or diesel car taxed at 30% or more the gap closes, and an allowance plus your own car can work out better, especially if you drive a lot for work and claim mileage payments. The full calculator handles car allowances and company cars, so you can compare both.