Company car tax calculator
What the car costs you each month in tax, and the percentage HMRC applies to get there.
- Price the tax is based on
- £0
- Appropriate percentage
- 0%
- Diesel supplement
- 0%
- Taxable benefit
- £0
- Income tax on it
- £0
- Costs your employer, Class 1A
- £0
Three numbers decide everything
Company car tax ignores what the car cost, what it is worth now, and how far you drive. It takes the P11D price, multiplies it by an appropriate percentage set by the car's CO2 emissions, and taxes the result as income. That is the whole mechanism.
The P11D price is the manufacturer list price with VAT, delivery and options included, before any discount. So a car your employer bought cheaply is taxed as though they paid full price, and every optional extra permanently raises the bill.
The percentage is where the money is
It runs from 4% for a zero-emission car to a 37% ceiling for anything over 155 g/km, climbing roughly a point per 5 g/km in between. That range is enormous. On a £40,000 car it is the difference between a £1,600 benefit and a £14,800 one, from the same list price.
Plug-in hybrids between 1 and 50 g/km are banded by electric-only range rather than emissions alone: 4% above 130 miles, then 7%, 10%, 14% and 16% as the range falls. A hybrid with a short electric range is taxed close to a petrol car, which is why the range figure matters more than the badge.
Why electric cars took over the company car park
At 4%, a £50,000 electric car creates a £2,000 benefit. A higher rate taxpayer pays about £67 a month. An equivalently priced petrol car at 130 g/km sits at 32%, a £16,000 benefit, and costs the same person around £533 a month. Nothing else in the UK tax system produces a gap that wide on an identical purchase, and it is the entire reason electric salary sacrifice schemes exist.
The diesel supplement
Diesel cars carry an extra 4 percentage points unless they are certified to Euro standard 6d, also known as RDE2. Most diesels registered from around 2021 do meet it and escape the supplement entirely, so tick the box if yours does: it is worth a few hundred pounds a year. The supplement can never push the percentage past 37%.
What this leaves out
The car fuel benefit charge, which applies separately if your employer pays for private fuel and is calculated from a fixed multiplier rather than your actual usage. It is usually poor value. Also excluded: vans, which have their own flat-rate charge, classic cars over 15 years old valued differently, cars adapted for disabled drivers, and the mechanics of a salary sacrifice arrangement, where the sacrificed salary is compared against the benefit under separate rules.
Common questions
- Why is an electric company car so much cheaper to run?
- Because the appropriate percentage is 4% rather than the 25% to 37% a petrol or diesel car attracts. A £50,000 electric car produces a £2,000 benefit and costs a higher rate taxpayer about £67 a month. The same price in a 130 g/km petrol car costs nearer £533 a month.
- What is the P11D price? It is not what my employer paid.
- It is the manufacturer list price including VAT, delivery and any optional extras, before any discount your employer negotiated. A car bought cheaply is still taxed on the full list price, which is why a heavily discounted model can be a poor company car.
- Does my diesel definitely get the 4% supplement?
- Only if it is not certified to Euro standard 6d, also called RDE2. Most diesels registered from 2021 onwards do meet it and are exempt. Your V5C or the manufacturer will confirm. The supplement never takes the percentage above 37%.
- Does paying towards the car reduce my tax?
- Two different payments do. A one-off capital contribution comes off the list price, but only up to £5,000. Ongoing payments for private use come off the benefit itself and can reduce it to nil, though only if you are genuinely required to make them.
- Is free fuel included in this?
- No. If your employer pays for private fuel there is a separate car fuel benefit charge on top, calculated from a fixed multiplier rather than what you actually use. It is famously poor value: unless you do very high private mileage, paying for your own fuel is usually cheaper.