" Benefit in Kind tax, also known as BIK is the tax applied to benefits like a company car for the employee. //adsrc=adsrc+"googletag.cmd.push(function() { googletag.display('"+divid+"'); }); " The more CO2 emissions, the higher its BiK rate. There will be 18 emission bands, as of 2019/20 , which you can find in the table below . //adsrc=adsrc+"<"+"/script>" New rates. Company car tax rates changed on 6 April 2020. Tax payable 40%: £2,776. { Example: BIK tax liability in 2017/18 For petrol and diesel cars, the new rates aren't as unequivocally positive. All rates for cars registered after 6 April 2020 (and EVs registered before) will move up one percentage point for 2021, and another for 2022. 'https:' : 'http:') + Also, you need not worry about charging and electric range as much, as thanks to the smaller battery sizes charging a Plug-In Hybrid Vehicle (PHEV) can normally be done overnight from a regular wall socket. You can calculate the company car tax owed by your employees in three steps, using the BiK rates in our table. Reducing your company car tax. The more CO2 emissions, the higher its BiK rate. Whenever a company provides an employee with a non-cash benefit – such as private medical cover or a company car that is available for private use – HMRC deems this to be the supply of a benefit, and the employee is liable for a tax charge. gads.type = 'text/javascript'; vans (see Private Use of Company Vans) vehicles not commonly used as a private vehicle and unsuitable for such use, such as hearses and lorries. Just select your vehicle or enter the P11D value and BIK rate to calculate. The BIK on a company car relates to the private use of the car by the employee, the cash benefit is calculated from the original market value (OMV) of the car. ** Rate applies to diesel vehicles not meeting the RDE2 standard. The tool is fully updated according to the lates legislation regarding CO2 emission references. Those cars will also continue to be taxed on their official NEDC CO. output, rather than the newer and more accurate - but usually less favourable - WLTP figure. Company car tax payable by an employee is based on the vehicle's P11D value multiplied by the appropriate BIK rate (determined by the car's CO2 and fuel type) and the employee's income tax rate (basic rate of 20%, higher rate of 40%, or additional rate of 45%). function AddAd(divid,slotid,width,height) Although most categories become two percentage points cheaper, new registrations are judged by WLTP CO. figures. And then: BiK Value x Tax Rate = Annual Company Car / BIK Tax. Company car tax is based on a vehicle’s Benefit in Kind (BiK) rate, and a BiK rate is based on how much your vehicle pollutes the atmosphere. Current company car BIK rates start at 0% for pure-electric cars, 3% for new PHEV models, 21% for the greenest hybrids, and 23% for any car with 100 g/km CO2 or more. An update to the benefit in kind (BiK) section showing the new rates announced. UK company car tax rules: 2020 - 2025. To calculate company car tax, cars registered before April 6th have BIK rates based on the NEDC test. That means for a pure electric vehicle with zero tailpipe emissions, company car drivers will be taxed at 0%, paying no BIK tax at all. Start with your company car’s P11D value, e.g. This section is only applicable where ownership of the car does not transfer to the employee. Abby Nuttall. Only using the vehicle part-time or making contributions to the fees are a couple of ways of doing so. Start with your company car’s P11D value, e.g. The calculator is based on the lump sum valuation method to determine the benefit in kind of making use of a company car or receiving a mobility allowance for employees and the corporate tax impact for employers. And secondly, to encourage you to choose a more environmentally-friendly vehicle. By this point, you’re probably wondering if there are ways to reduce your BIK payments or company car tax. The latter measure even extends to electric cars registered before 6 April. Every BiK has a tax rate that is applied to your income tax. Source: HMRC 2020. adsrc=adsrc+"});\n"; The announcement, which sees company car benefit-in-kind tax rates for zero emission cars in 2020/21 cut to 0% from the previously announced 2% but all other already published rates remaining unchanged for cars registered before April 6, 2020, sees reduced rates … rising to 31% over the same period. Be aware that the diesel non-RDE2 supplement is now 4% and is expected to still be applicable in 2020/21. To get the amount your company car will cost you in tax per year, you then multiply the BIK value by your income tax banding. Then multiple £6,941 by your tax band: Tax payable 20%: £1,388. } The BIK on a company car relates to the private use of the car by the employee, the cash benefit is calculated from the original market value (OMV) of the car. As such, there will be a change-over period where two different sets of BIK rates will be used - one for vehicles registered before 6th April 2020, and one for those registered after that date. The table below shows how the percentage BIK rates vary with vehicle CO2 and electric-only range. (function(i,s,o,g,r,a,m){i['GoogleAnalyticsObject']=r;i[r]=i[r]||function(){ Although most categories become two percentage points cheaper, new registrations are judged by WLTP CO2 figures. You can calculate the company car tax owed by your employees in three steps, using the BiK rates in our table. A vehicles CO2 emission is recorded in (g/km) and has an appropriate percentage applied for 2020 - 2023. The incentive couldn’t be bigger. Choose the car using the form below. What’s more, from April 2021 company car tax will stay significantly low at just 1%, rising to 2% from 2022*. BIK rates are shown from 2020 - 2023 including the 0% electric car rate, for 2020/21. //googletag.defineSlot('/12319195/BC_top_billboard', [970, 250], 'div-gpt-ad-1355823612163-10').addService(googletag.pubads()); Before we delve into the company car tax rates for 2018/19, here’s a quick refresher. The OMV is the list price of the vehicle including the VAT and VRT at time of first registration. CO2 (g/km) See seperate table for NEDC-derived CO2 BIK rates, for models registered before April 2020. £20,000. Volvo’s exquisite XC40 SUV now has even more reason to be on your company car shopping list: the T5 Twin Engine PHEV model combines a 1.5-litre three-cylinder petrol engine with an 82hp electric motor to provide emissions of 47g/km and a BIK rate of 12% for 2020/21. Note that the below table makes use of current WLTP-derived CO2 data, and for cars registered from April 2020. In other words, it’s a valuable perk over and above your salary, which is why you have to pay tax on it. Private use of company cars; Private use of company vans; Travel passes or air miles; Free or subsidised accommodation; Free use of assets (other than accommodation, company cars or vans) Employers in the car and motor industry; Other benefits Multiply the P11D value by the company car tax rate (from the table above) to get your BiK amount. Then multiple £6,941 by your tax band: Tax payable 20%: £1,388. Cars registered after April 6th will have BIK rates based on WLTP assessments. vans (see Private Use of Company Vans) vehicles not commonly used as a private vehicle and unsuitable for such use, such as hearses and lorries. Company car tax rates for 2023-24 and 2024-25 will be kept at 2022-23 rates * Add 4% for diesels up to a maximum of 37% (unless RDE2 compliant). //googletag.defineSlot('/12319195/BC_article_mpu', [300, 250], 'div-gpt-ad-1355823612163-0').addService(googletag.pubads()); var useSSL = 'https:' == document.location.protocol; ga('create', 'UA-783528-1', 'auto'); //googletag.defineSlot('/12319195/BC_surround_sky_left', [160, 600], 'div-gpt-ad-1355823612163-8').addService(googletag.pubads()); To calculate how much BiK tax you would pay on a company car, use our handy BiK Company Car Tax Calculator. "Because many drivers' decision to opt out of a 'favourite' employee perk was driven by tax uncertainty. Or you can use HMRC’s company car and car fuel benefit calculator if it works in your browser. Take a look at the BIK rates and how to calculate the company car tax for any vehicle. var gads = document.createElement('script'); Of course, electric vehicles have the lowest BiK rate. Company Car Tax Benefit in Kind (BIK) Rates Table 2019/20 to 2020/21. Benefit in kind (BIK) - this is any benefit which employees receive from employment but are not included in a salary. So in this example: £35,465 x 32% = £11,348.80. Company Car Tax Benefit in Kind (BIK) Rates Table 2019/20 to 2020/21. Starting in April 2020, all Tesla cars will be eligible for 0% BiK rate during the 2020-2021 tax year. Updated for … This 0% rate also applies to company car drivers in pure electric vehicles registered prior to April 6, 2020. For employees, HMRC considers a company car to be a benefit-in-kind (known as BiK in short). ** Rate applies to diesel vehicles not meeting the RDE2 standard. We have continually called on the government to recognise that fleets now operate company cars over typically four and five years. Under the current system, company and employee company car tax are both based on a percentage of the official value of the car (called the 'P11D'), the percentage being primarily determined by the car's CO2 emissions. If you transfer the car to your employee, general BIK rules shall apply. Table shows BIK rates for models registered before 6th April 2020, based on official NEDC CO2 figures. If you continue without changing your settings, we will assume that you are happy to receive all cookies on the Business Car website. If you transfer the car to your employee, general BIK rules shall apply. From 06 April 2018, to account for the greater level of NOx emissions, a 4% diesel car tax supplement is payable which applies for non-RDE2 compliant diesels, the vast majority of current diesel models. This company car tax table shows the BIK rate bands based on CO2 emissions. To calculate the company car tax we use the following formulae: P11D Value x BiK CO 2 Rate = BiK Value. var adsrc="