Free tool · 2026/27

Company car calculator for directors: benefit in kind, Class 1A and own-car mileage

Quick answer: A company car is taxed on its list price × the appropriate percentage for its CO2 and electric range. A new electric car is 4% in 2026/27, then 5%, 7% and 9% to 2029/30, so a £45,000 EV is a £1,800 benefit this year. You pay income tax on that at your marginal rate and the company pays 15% Class 1A. The alternative: drive your own car and have the company pay 55p a mile tax-free for the first 10,000 business miles.

Written and reviewed by James Whitfield · Last checked 4 November 2026 against GOV.UK, HMRC and legislation.gov.uk · Editorial standards · Methodology. Estimates for planning only, not tax advice.

Use the calculator

Company car vs own car calculator

Enter your figures and press Calculate. The result shows below the form.

Tax year 2026/27

2026/27 benefit in kind

£1,800 (4%)

Your tax, 2026/27

£810

Company Class 1A, 2026/27

£270

Tax yearYear	Appropriate %	Benefit in kindBenefit	Your taxTax	Class 1A1A
2026/27 (4%)	4%	£1,800	£810	£270
2027/28 (5%)	5%	£2,250	£1,012.50	£337.50
2028/29 (7%)	7%	£3,150	£1,417.50	£472.50
2029/30 (9%)	9%	£4,050	£1,822.50	£607.50
Total			£5,062.50	£1,687.50

Year 1 capital allowance (100% first-year allowance)	£45,000
Corporation Tax saved in year 1 (allowance + Class 1A) at £60,000 profit	£9,351.30

Your own car instead: 6,000 business miles

Mileage the company can pay you tax-free (55p, then 25p over 10,000)	£3,300
Corporation Tax the company saves on it	£874.50
Tax cost of the company car in 2026/27 (your tax + Class 1A)	£1,080

Capital allowances are worked out on the list price; use what the company actually paid if it differs. The company car figures leave out fuel benefit, running costs and finance; your own car means buying and running it from taxed income. Later years use 2026/27 income tax and dividend rates. A company car's business miles can be reimbursed at HMRC's advisory fuel rates instead.

About this calculator

What this tool covers

This tool puts the company-car decision in numbers for a director who also takes dividends. It reads the official appropriate percentage for each year from 2026/27 to 2029/30, works out your benefit in kind, the extra income tax it causes on top of your salary and dividends, the company's Class 1A, and the Corporation Tax relief the company gets on the car and the Class 1A. Then it shows the mileage the company could pay you tax-free if you used your own car instead.

Our expenses guides explain what a company can pay for; this page is the calculator for the car question. It leaves out fuel benefit, running costs and finance, which vary too much to assume.

Read alongside: Limited company expenses guide · Company expenses guide.

How this is worked out

How the company car figures are worked out

Benefit in kind = the car's list price (the P11D value, including options) × the appropriate percentage for the tax year. The percentage comes from the Budget 2026 rates table: by CO2 g/km, and for 1 to 50 g/km by electric range.¹
Diesel-only cars add 4 percentage points unless they meet the RDE2 standard, up to the cap: 37% to 2027/28, 38% in 2028/29 and 39% in 2029/30.¹
Your tax is the difference between your income tax and dividend tax with and without the benefit. The benefit is employment income, so it uses your Personal Allowance and basic-rate band before your dividends do. Later years use 2026/27 income tax and dividend rates.
The company pays Class 1A at 15% of the benefit. The car itself gets capital allowances: 100% in year one for a new zero-emission car bought by 31 March 2027, else 14% a year (50 g/km or less) or 6% (over 50 g/km) on the reducing balance.²³⁴
Own car: the company can pay up to 55p a mile for the first 10,000 business miles in the tax year and 25p after that with no tax or NI for you, and deducts the payments from its profits. The rate above 10,000 miles is due to rise to 35p from 6 April 2027.²⁵

Worked examples

A new £45,000 electric car

A director on a £12,570 salary and £37,700 of dividends, so already at the top of the basic-rate band. The company has £60,000 of taxable profit.

2026/27: 4% benefit£1,800 → tax £810 + Class 1A £270

2027/28: 5% benefit£2,250 → tax £1,012.50 + Class 1A £337.50

2028/29: 7% benefit£3,150 → tax £1,417.50 + Class 1A £472.50

2029/30: 9% benefit£4,050 → tax £1,822.50 + Class 1A £607.50

Corporation Tax saved in year 1 (100% allowance + Class 1A)£9,351.30

The benefit is small, but it sits under the dividends: every pound is taxed at 20% and moves a pound of dividends from 10.75% to 35.75%, 45% in all. The 100% first-year allowance needs the car to be new and unused and bought by 31 March 2027.¹³⁴

A plug-in hybrid at the same price

30 g/km and a 45-mile electric range. The 1 to 50 g/km bands are set by electric range until 2027/28, then all move to 18%.

2026/27: 10% benefit£4,500 → tax £2,025

2027/28: 11% benefit£4,950 → tax £2,227.50

2028/29: 18% benefit£8,100 → tax £3,645

2029/30: 19% benefit£8,550 → tax £3,847.50

Year 1 capital allowance£6,300 (14% main rate writing-down allowance)

From 2028/29 the hybrid's rate rises by 7 points, from 11% to 18%. A four-year lease or purchase decision taken now should use the later rates, not this year's.

A £35,000 petrol car at 130 g/km

The same director, a conventional car.

2026/27 appropriate percentage32%

Benefit in kind£11,200

Director's tax£5,040

Company Class 1A£1,680

Year 1 allowance (6% special rate pool)£2,100

Over 50 g/km the car goes in the special rate pool at 6% a year, so the tax relief is slow. Compared with the same mileage paid tax-free on your own car, the company car costs £6,720 in tax in its first year before any fuel.

Every figure in these examples is calculated by the same code as the calculator above, using the 2026/27 rates.

Mistakes and edge cases

Company car traps for directors

Using the price you paid

The benefit uses the list price when new, with options, not the discounted price or what a used car cost.

Assuming a hybrid stays cheap

From 2028/29 every car from 1 to 50 g/km is 18%, whatever its electric range, against 7% for an electric car.

Second-hand electric cars

A used EV gets the 14% main rate allowance, not the 100% first-year allowance, which is for new and unused cars only.

Forgetting the dividend stacking

If your salary and dividends already reach £50,270, a benefit costs 20% on itself plus another 25% on the dividends it pushes from 10.75% into 35.75%: 45% in all, not 20%.

Leaving out fuel

If the company pays for private fuel, a separate car fuel benefit applies. This tool does not include it; avoid it by not having private fuel paid.

Reporting changes from April 2027

Budget 2026 says company car benefits will be reported and taxed through payroll from 6 April 2027 instead of on the P11D. That changes the paperwork, not the amounts here.

Common questions

Company car vs own car calculator: FAQs

What is the BIK rate for an electric company car in 2026/27?

4%. It rises to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30, from the Budget 2026 rates table.

How is company car tax worked out?

List price × appropriate percentage gives the benefit in kind. You pay income tax on the benefit at your marginal rate and the company pays 15% Class 1A on it.

Can my company claim the full cost of an electric car?

A new and unused zero-emission car bought by 31 March 2027 gets a 100% first-year allowance for Corporation Tax. Other cars get 14% or 6% a year.

What mileage can my company pay me tax-free in 2026/27?

55p a mile for the first 10,000 business miles in the tax year and 25p after that, for a car you own. The higher rate is due to become 35p from 6 April 2027.

Is a company car or my own car better?

It depends on the car and your mileage. An electric car's low percentage makes a company car cheap in tax; with a high-emission car and lots of business miles, your own car with mileage paid usually wins.

Does the benefit in kind affect my dividend tax?

Yes. The benefit counts as employment income, so it fills your basic-rate band before dividends and can push dividends into the 35.75% band.

Sources & references

Where these figures come from

The rates and rules on this page are drawn from the official UK government sources below, using the confirmed 2026/27 figures. Each link opens the relevant HMRC, GOV.UK or Companies House page in a new tab.

Verified against published UK government guidance.

Every rate on this page was checked against these pages on 4 November 2026.

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