BiK (benefit in kind, UK)
Benefit in kind
The UK tax on a company car as a perk, calculated from the car's list price and CO2 band. Electric cars sit in the lowest bands.
When a UK employer provides a car that is also available for private use, HMRC treats that convenience as income, a benefit in kind, and taxes the employee on it. In broad terms, the taxable amount is the car's list price plus taxable accessories, multiplied by a percentage set by a government table keyed to the car's CO2 g/km figure. The lower the emissions, the smaller the percentage.
The design is openly behavioral. Electric cars sit in the lowest band, so the same list price produces a much smaller taxable benefit for an EV than for a high-emission gas car. For a UK company car chooser, the BiK percentage matters alongside the list price itself. Plug-in hybrids are assessed on both their CO2 figure and their electric range.
The percentages are revised. As of September 2026, HMRC's published schedule sets 5% for zero-emission cars in 2027 to 2028, then raises that rate by 2 percentage points a year through 2029 to 2030. Verify the current band for the exact car and tax year on the official tables before choosing.
Differs by market
BiK is UK-specific; other countries have their own company car tax rules. The rates and bands are set by the UK government and revised over time; always check the current tax year's table.