Company car tax calculator

What a company car actually costs you each month, at your own tax rate. 2026/27 rates.

By James Burfield Rates from gov.uk, checked 17 July 2026 How this works

The same car, different engines

Monthly company car tax at your salary. The list price is identical in every row; only the emissions change.

Tax year 2026/27 Rates checked 2026-07-17 Runs entirely in your browser

How company car tax works

Three numbers decide it: what the car cost new, how much CO2 it emits, and what rate of income tax you pay. gov.uk publishes a table turning emissions into an appropriate percentage. Multiply the car's P11D price by that percentage and you get the cash equivalent, which is treated as income and taxed at your rate.

You pay no National Insurance on it. Your employer pays Class 1A instead.

The percentages

Diesels not certified to Euro 6d (RDE2) add 4 points, up to the 37% ceiling.

Why the electric range matters so much

Between 1 and 50 g/km the band is set by how far the car goes on the battery, not by emissions. Two plug-in hybrids emitting exactly the same CO2 can be taxed at 4% or 16% depending on electric range alone. It is the single biggest lever on a hybrid's tax bill and it is not on the window sticker.

Company car tax is a separate bill from what the car costs to run. If you are weighing petrol against electric on the whole cost rather than just the tax, Toolbay's fuel cost calculator prices up the mileage side.

The bit other calculators get wrong

Most company car calculators ask whether you are a 20% or 40% taxpayer and multiply. That breaks the moment the car straddles a band. A £12,800 car on a £45,000 salary is partly basic rate and partly higher rate, and a single percentage cannot express that.

This one works it out by running your whole tax position twice, with the car and without, and taking the difference. That also catches the case where a car drags you over £100,000 and starts eating your Personal Allowance, which can make the effective rate on the car 60% or more.

Questions

How is company car tax worked out?

Take the car's P11D price (list price plus options), multiply it by the appropriate percentage for its CO2 emissions, and that gives the cash equivalent. You pay income tax on that figure at your own rate. gov.uk sets the percentage table; an electric car is 4% in 2026/27, and the dirtiest cars are capped at 37%.

Do I pay National Insurance on a company car?

No. Company car benefit is income tax only. Your employer pays Class 1A National Insurance on it instead, which is why the deduction on your payslip is smaller than you might expect from the cash equivalent.

Why is an electric company car so much cheaper?

Because the appropriate percentage is tied to CO2. An electric car sits at 4% while a 130 g/km petrol sits at 32%, so on the same list price the electric car's taxable value is eight times smaller. That gap, not the fuel saving, is what makes salary sacrifice EV schemes work.

How does the electric range affect a plug-in hybrid?

For cars emitting 1 to 50 g/km the band is set by electric-only range rather than CO2. A hybrid that does 130+ miles on the battery is taxed at 4%, the same as a full EV. One that manages under 30 miles is taxed at 16%, four times as much, even at identical emissions.

What is the diesel supplement?

Diesel cars have 4 percentage points added unless they are certified to Euro standard 6d, also called RDE2. The supplement cannot push a car past the overall 37% ceiling. If your diesel is RDE2 certified and your calculator does not ask, it is overcharging you.

Can a company car push me into a higher tax band?

Yes, and this is the part most calculators miss. The cash equivalent is taxable income, so it stacks on top of your salary. A £12,800 car on a £45,000 salary puts several thousand pounds into the higher rate. It also counts toward the £100,000 Personal Allowance taper, so a car can cost someone their allowance without any pay rise at all.