Understanding Benefit in Kind (BIK)

Benefit in Kind (BIK) is a tax that employees in the UK pay on the 'perk' of having a company car for personal use. It is a critical consideration when leasing a company car, as it can significantly impact your overall tax liability.

BIK Tax Bands

BIK tax bands in the UK are set by HMRC and are primarily based on a vehicle's CO2 emissions. If you drive a hybrid car that emits less than 50g/km, the rate is based on the zero-emissions range. This is the distance the car can go on electric power before its batteries need recharging.

The zero-emissions range can be found, on any car with less than 50g/km, by going to the "Technical" tab → Opening "Electric Vehicle Data" → Then locating "WLTP - Equivalent AER (miles) - Comb"

The lower the emissions, the lower the BIK tax you'll pay. This makes electric cars an attractive choice, as they have the lowest BIK tax.

Here's a table with BIK tax bands as per HMRC guidelines:

CO2 (g/km)	Electric range (miles)	2023-24 (%)	2024-25 (%)	2025-26 (%)	2026-27 (%)	2027-28 (%)
0	–	2	2	3	4	5
1-50	>130	2	2	3	4	5
1-50	70-129	5	5	6	7	8
1-50	40-69	8	8	9	10	11
1-50	30-39	12	12	13	14	15
1-50	<30	14	14	15	16	17
51-54		15	15	16	17	18
55-59		16	16	17	18	19
60-64		17	17	18	19	20
65-69		18	18	19	20	21
70-74		19	19	20	21	21
75-79		20	20	21	21	21
80-84		21	21	22	22	22
85-89		22	22	23	23	23
90-94		23	23	24	24	24
95-99		24	24	25	25	25
100-104		25	25	26	26	26
105-109		26	26	27	27	27
110-114		27	27	28	28	28
115-119		28	28	29	29	29
120-124		29	29	30	30	30
125-129		30	30	31	31	31
130-134		31	31	32	32	32
135-139		32	32	33	33	33
140-144		33	33	34	34	34
145-149		34	34	35	35	35
150-154		35	35	36	36	36
155-159		36	36	37	37	37
160-164		37	37	37	37	37
165-169		37	37	37	37	37
170+		37	37	37	37	37

Why BIK Matters

The BIK tax rate directly affects the amount of tax you will pay on your company car. Choosing a vehicle with lower CO2 emissions can significantly reduce your BIK tax liability and save you money.

It's essential to consider the BIK implications when selecting a company car, and you should consult with a tax professional for personalised advice on how to minimise your tax liability.

If you have any further questions about BIK or need assistance in choosing the right company car to minimize your tax obligations, please don't hesitate to get in touch with our car leasing experts.