How company car tax works
Company-car tax applies to the cash equivalent of having a car available for private use. This calculator gives a full-year estimate from the statutory car price, appropriate percentage and selected income-tax rate.
1. Car price for tax
Start with the statutory price and chargeable accessories rather than the employer’s discounted or second-hand purchase price. A qualifying employee capital contribution can reduce the price by up to £5,000.
2. Appropriate percentage (CO2)
For 2026/27 a fully electric car uses 4%. Plug-in hybrids (1-50 g/km) use 4% to 16% depending on electric range. Petrol and diesel cars run from 17% at 51 g/km up to a 37% maximum, rising as CO2 increases.
3. Diesel supplement
Diesel cars that do not meet RDE2 generally add 4 percentage points, still capped at 37%. Check the car documentation instead of inferring RDE2 status from registration year.
4. Your tax rate and fuel benefit
The taxable benefit is multiplied by your income tax rate — 20%, 40% or 45%. If your employer also pays for private fuel, a separate charge of £29,200 times the CO2 percentage applies. Employers pay Class 1A National Insurance at 15% on the benefit.
5. What this estimate does not include
The result assumes full-year availability and no qualifying private-use payments. It does not calculate salary foregone, salary-sacrifice scheme charges, Scottish income-tax bands, shared-car rules or every statutory adjustment.
This is a free, independent guide and estimate, not tax advice. Figures use HMRC company car rules for 2026/27 and income tax rates for England, Wales and Northern Ireland; Scottish taxpayers have different rates. Individual circumstances, availability periods, shared cars and other adjustments can change the result. Check GOV.UK or speak to an accountant for your exact position.
Sources: GOV.UK — Tax on company cars · HMRC — 2026/27 appropriate percentages · HMRC — car-benefit adjustments