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 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 (%) |
2028/29 (%) |
2029/30 (%) |
|
0 |
N/A |
2 |
2 |
3 |
4 |
5 |
7 |
9 |
|
1-50 |
>130 |
2 |
2 |
3 |
4 |
5 |
18 |
19 |
|
1-50 |
70-129 |
5 |
5 |
6 |
7 |
8 |
18 |
19 |
|
1-50 |
40-69 |
8 |
8 |
9 |
10 |
11 |
18 |
19 |
|
1-50 |
30-39 |
12 |
12 |
13 |
14 |
15 |
18 |
19 |
|
1-50 |
<30 |
14 |
14 |
15 |
16 |
17 |
18 |
19 |
|
51-54 |
|
15 |
15 |
16 |
17 |
18 |
19 |
20 |
|
55-59 |
|
16 |
16 |
17 |
18 |
19 |
20 |
21 |
|
60-64 |
|
17 |
17 |
18 |
19 |
20 |
21 |
22 |
|
65-69 |
|
18 |
18 |
19 |
20 |
21 |
22 |
23 |
|
70-74 |
|
19 |
19 |
20 |
21 |
21 |
22 |
23 |
|
75-79 |
|
20 |
20 |
21 |
21 |
21 |
22 |
23 |
|
80-84 |
|
21 |
21 |
22 |
22 |
22 |
23 |
24 |
|
85-89 |
|
22 |
22 |
23 |
23 |
23 |
24 |
25 |
|
90-94 |
|
23 |
23 |
24 |
24 |
24 |
25 |
26 |
|
95-99 |
|
24 |
24 |
25 |
25 |
25 |
26 |
27 |
|
100-104 |
|
25 |
25 |
26 |
26 |
26 |
27 |
28 |
|
105-109 |
|
26 |
26 |
27 |
27 |
27 |
28 |
29 |
|
110-114 |
|
27 |
27 |
28 |
28 |
28 |
29 |
30 |
|
115-119 |
|
28 |
28 |
29 |
29 |
29 |
30 |
31 |
|
120-124 |
|
29 |
29 |
30 |
30 |
30 |
31 |
32 |
|
125-129 |
|
30 |
30 |
31 |
31 |
31 |
32 |
33 |
|
130-134 |
|
31 |
31 |
32 |
32 |
32 |
33 |
34 |
|
135-139 |
|
32 |
32 |
33 |
33 |
33 |
34 |
35 |
|
140-144 |
|
33 |
33 |
34 |
34 |
34 |
35 |
36 |
|
145-149 |
|
34 |
34 |
35 |
35 |
35 |
36 |
37 |
|
150-154 |
|
35 |
35 |
36 |
36 |
36 |
37 |
38 |
|
155-159 |
|
36 |
36 |
37 |
37 |
37 |
38 |
39 |
|
160-164 |
|
37 |
37 |
37 |
37 |
37 |
38 |
39 |
|
165-169 |
|
37 |
37 |
37 |
37 |
37 |
38 |
39 |
|
170+ |
|
37 |
37 |
37 |
37 |
37 |
38 |
39 |
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 minimise your tax obligations, please don't hesitate to get in touch with our car leasing experts.