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Company car tax

Company car tax, worked out

What does this guide cover? A company car is taxed as a benefit rather than as a vehicle. HMRC sets an appropriate percentage from the car's CO2 figure, applies it to the P11D value to give a taxable benefit, and you pay income tax on that at your own marginal rate.

4%
Zero emission car, 2026/27
HM Revenue and Customs, Work out the appropriate percentage for company car benefits (480: Appendix 2) (as of 6 April 2026)
37%
Highest band, any car
HM Revenue and Customs, Work out the appropriate percentage for company car benefits (480: Appendix 2) (as of 6 April 2026)
£29,200
Fuel benefit multiplier
HM Revenue and Customs, Van benefit charge and fuel benefit charges for cars and vans for tax year 2026 to 2027 (as of 3 December 2025)

What will this company car cost me?

P11D value multiplied by HMRC's appropriate percentage, then by your marginal income tax rate. Every percentage comes from HMRC's own tables.

£56

Income tax a month, 2026/27

Appropriate percentageHMRC's figure for 2026/27.
4%
Taxable benefitThe cash equivalent reported on the P11D.
£1,680
Income tax a year
£672
Income tax a month
£56
How this was worked out

Caveats

  • Capital contributions, months the car was unavailable and payments you make for private use all reduce the charge. None of them is modelled here, so this is the most it can be.
  • Scotland sets its own income tax bands, so a Scottish higher rate taxpayer pays 42 per cent rather than 40 and reaches that rate at a lower salary.

The same car in three tax years

Appropriate percentage for a zero emission car and for a 120 g/km petrol car
Tax yearZero emission120 g/km petrolCap
2025/263%30%37%
2026/274%30%37%
2027/285%30%37%

Four things that reduce the charge

  • A capital contribution towards the price of the car, capped at £5,000, comes off the P11D value.
  • Months the car was genuinely unavailable are deducted, pro rata.
  • Payments you make to your employer for private use reduce the benefit pound for pound.
  • A car shared with somebody else is apportioned rather than charged twice in full.

None of the four is modelled in the calculator above, and every one of them only ever reduces the charge, so the figure it gives is the most it can be.

Common questions

How is company car tax worked out?
P11D value multiplied by an appropriate percentage set by the car's CO2 figure, which gives the taxable benefit. That figure is then taxed at your marginal income tax rate, so a higher rate taxpayer pays 40 per cent of it.
Why does the electric range matter?
Cars emitting 1 to 50 g/km are banded by electric only range rather than by CO2. In 2026/27 that runs from 4 per cent at 130 miles and above to 16 per cent below 30 miles, which is a very large difference on the same car.
What is the diesel supplement?
4 percentage points added to a diesel that is not certified to the RDE2 standard, which HMRC treats as the same thing as Euro 6d. It cannot push the appropriate percentage above the 37 per cent cap, and it never applies to a hybrid.
Does Scotland pay a different amount?
Yes. The benefit is the same but the tax on it is not. Scotland sets its own rates and bands, so a Scottish higher rate taxpayer pays 42 per cent rather than 40 and reaches that rate at a lower salary.

Sources