Company Car Tax Bands Explained

Everything you need to know about Benefit-In-Kind (BIK) car tax

Published: 12 November 2021
Categories:
- Tax Bands
- Guides & Education

If you’re a business that provides company cars for employees' private use too, then you’ll need to understand what tax is required to pay on the vehicle.

The world of Benefit-In-Kind (BIK) company car tax can be a complicated one, so we’ve tackled the subject head-on to help you make sense of it all...

What is Benefit-In-Kind (BIK) company car tax?

If you use a company car for private purposes - including the commute to and from work - you’ll have to pay excess tax on that vehicle. To work out the cost, factors considered include; your salary, list price of the car (also referred to as the P11D) and fuel usage.

Benefit-In-Kind company car tax - also known as BIK - is applicable to employees who receive additional benefits or perks on top of their basic annual salary. A BIK contribution is required if you have a company car for private use. These are categorised into varying percentage rates, depending on your car’s emissions and when it was first registered.

How does the BIK company car tax system work?

Percentage rates for company cars are determined by three things:

The tax bracket of your annual salary.
The list price of your car (P11D).
The car’s emissions.

Of course with any tax system, the BIK company car tax rates are subject to change with each financial year. In April 2020, the UK Government announced that CO2 figures used to calculate tax rates would be determined by World Harmonised Light Vehicle Test Procedure (WLTP) data going forwards.

From this, two separate sets of BIK rates are now used; one for vehicles registered before 6th April 2020 and another for cars first registered after 6th April 2020, which we’ve displayed in two tables below.

Unsure of how much you will need to pay? Estimate the tax payable on employees' company cars, by using the HMRC calculator on the official HM Revenue & Customs website.

Are electric vehicles exempt from BIK company car tax?

During the financial year 2020/2021, electric vehicles were exempt so there was no BIK company car tax to pay at all at this time. For the 2021/2022 financial year however, this has changed.

If you drive an electric company car registered after 6th April 2020, you will pay 1% BIK tax during the financial year 2021/2022. This will increase to 2% during the 2022/2023 financial year.

The above rates also apply to hybrid vehicles with emissions from 1-50g/km, or an electric range of over 130 miles per charge. The current rates are in place to encourage drivers to choose company cars with lower levels of CO2 and NOx emissions.

What are the BIK company car tax rates for 2021 to 2024?

The UK government has announced BIK company car tax rates up until 2024 to help businesses across the country plan ahead. The tax bands have been determined by the amount of CO2 emissions, the range of miles per charge, and the Real Driving Emissions 2 for diesel cars (known as RDE2).

Take a look at the tables below to find out how the rates in place from April 2021 to March 2024 will affect you...

BIK company car rates for vehicles registered after 6th April 2020:

Vehicle CO2 emissions (g/km)	Electric range (miles)	BIK rate % (electric, petrol, RDE2 diesel) 2021-2022	BIK rate % (non-RDE2 diesel) 2021-2022	BIK rate % (electric, petrol, RDE2 diesel) 2022-2023	BIK rate % (non-RDE2 diesel) 2022-2023	BIK rate % (electric, petrol, RDE2 diesel) 2023-2024	BIK rate % (non-RDE2 diesel) 2023-2024
0		1		2		2
1-50	130+	1		2		2
1-50	70-129	4		5		5
1-50	40-69	7		8		8
1-50	30-39	11		12		12
1-50	1-30	13		14		14
51-54		14		15		15
55-59		15		16		16
60-64		16		17		17
65-69		17		18		18
70-74		18		19		19
75-79		19	23	20	24	20	24
80-84		20	24	21	25	21	25
85-89		21	25	22	26	22	26
90-94		22	26	23	27	23	27
95-99		23	27	24	28	24	28
100-104		24	28	25	29	25	29
105-109		25	29	26	30	26	30
110-114		26	30	27	31	27	31
115-119		27	31	28	32	28	32
120-124		28	32	29	33	29	33
125-129		29	33	30	34	30	34
130-134		30	34	31	35	31	35
135-139		31	35	32	36	32	36
140-144		32	36	33	37	33	37
145-149		33	37	34	37	34	37
150-154		34	37	35	37	35	37
155-159		35	37	36	37	36	37
160-164		36	37	37	37	37	37
165-169		37	37	37	37	37	37
170+		37	37	37	37	37	37

BIK company car rates for vehicles registered before 6th April 2020:

Vehicle CO2 emissions (g/km)	Electric range (miles)	BIK rate % (electric, petrol, RDE2 diesel) 2021-2022	BIK rate % (non-RDE2 diesel) 2021-2022	BIK rate % (electric, petrol, RDE2 diesel) 2022-2023	BIK rate % (non-RDE2 diesel) 2022-2023	BIK rate % (electric, petrol, RDE2 diesel) 2023-2024	BIK rate % (non-RDE2 diesel) 2023-2024
0		1		2		2
1-50	130+	2		2		2
1-50	70-129	5		5		5
1-50	40-69	8		8		8
1-50	30-39	12		12		12
1-50	1-30	14		14		14
51-54		15		15		15
55-59		16		16		16
60-64		17		17		17
65-69		18		18		18
70-74		19		19		19
75-79		20	24	20	24	20	24
80-84		21	25	21	25	21	25
85-89		22	26	22	26	22	26
90-94		23	27	23	27	23	27
95-99		24	28	24	28	24	28
100-104		25	29	25	29	25	29
105-109		26	30	26	30	26	30
110-114		27	31	27	31	27	31
115-119		28	32	28	32	28	32
120-124		29	33	29	33	29	33
125-129		30	34	30	34	30	34
130-134		31	35	31	35	31	35
135-139		32	36	32	36	32	36
140-144		33	37	33	37	33	37
145-149		34	37	34	37	34	37
150-154		35	37	35	37	35	37
155-159		36	37	36	37	36	37
160+		37	37	37	37	37	37

Think electric, choose Wilsons

Here at Wilsons Epsom we love electric cars! We’re proud to be electric vehicle experts, so accelerate your journey into EV ownership by exploring our huge range of electric, hybrid, and plug-in hybrid cars.

As the largest family-run new and used car supermarket in the South of England, we offer customers an electrifying choice of vehicles at unbeatable value and a service they can trust.

If you’re looking for an electric vehicle to benefit from a better BIK company car tax rate, then we can help. With plenty of EV offers available, visit our Surrey-based showroom to discover our range of electric vehicles in more detail.