Benefit in Kind Calculator UK 2025/26
Calculate the tax on your employee benefits — company car, health insurance, gym membership, loans and more. See your P11D taxable value, annual BIK tax bill, and your employer's Class 1A NI cost instantly.
Calculation Breakdown
Company Car BIK Rates 2025/26
| CO2 Emissions (g/km) | Electric Range | BIK % 2025/26 | BIK % 2024/25 |
|---|---|---|---|
| 0 | N/A (pure electric) | 2% | 2% |
| 1–50 | 130+ miles | 2% | 2% |
| 1–50 | 70–129 miles | 5% | 5% |
| 1–50 | 40–69 miles | 8% | 8% |
| 1–50 | 30–39 miles | 12% | 12% |
| 1–50 | <30 miles | 14% | 14% |
| 51–54 | — | 15% | 15% |
| 55–59 | — | 16% | 16% |
| 60–64 | — | 17% | 17% |
| 65–69 | — | 18% | 18% |
| 70–74 | — | 19% | 19% |
| 75–79 | — | 20% | 20% |
| 80–84 | — | 21% | 21% |
| 85–89 | — | 22% | 22% |
| 90–94 | — | 23% | 23% |
| 95–99 | — | 24% | 24% |
| 100–104 | — | 25% | 25% |
| 105–109 | — | 26% | 26% |
| 110–114 | — | 27% | 27% |
| 115–119 | — | 28% | 28% |
| 120–124 | — | 29% | 29% |
| 125–129 | — | 30% | 30% |
| 130–134 | — | 31% | 31% |
| 135–139 | — | 32% | 32% |
| 140–144 | — | 33% | 33% |
| 145–149 | — | 34% | 34% |
| 150–154 | — | 35% | 35% |
| 155–159 | — | 36% | 36% |
| 160–164 | — | 37% | 37% |
| 165–169 | — | 37% | 37% |
| 170+ | — | 37% | 37% |
Common Benefits in Kind & Their Tax Treatment
| Benefit | Taxable? | BIK Rate | Exemptions |
|---|---|---|---|
| Company car | Yes | 2–37% of list price | Based on CO2 emissions |
| Private health insurance | Yes | Full premium cost | None |
| Company phone | Often exempt | N/A | 1 phone per employee if employer contract |
| Company laptop/tablet | Often exempt | N/A | If primarily for work use |
| Cycle to Work scheme | Exempt | N/A | Under approved scheme rules |
| Gym membership | Yes | Full cost | Exempt if on-site employer gym |
| Workplace canteen | Often exempt | N/A | If available to all employees |
| Interest-free loan | Yes (if over £10,000) | Official rate 2.25% | Loans under £10,000 exempt |
| Living accommodation | Yes | Annual value / rent | If necessary for the job |
| Trivial benefits | Exempt | N/A | If cost £50 or less per benefit |
| Employer pension contributions | Exempt | N/A | No BIK charge |
What is a Benefit in Kind?
A benefit in kind (BIK) is any non-cash perk provided by an employer to an employee or director that has a monetary value. HMRC defines it as anything that is not directly part of an employee's salary or wages but still has an economic benefit. Common examples include company cars, private medical insurance, gym memberships, interest-free loans, and living accommodation provided by the employer.
Benefits in kind are taxable because HMRC treats them as part of your overall remuneration package. The employee pays income tax on the taxable value of the benefit, while the employer pays Class 1A National Insurance at 15% for 2025/26. The taxable value of each benefit is reported on form P11D, which the employer must submit to HMRC by 6 July each year.
Understanding how BIK tax works is essential for both employees and employers. For employees, it directly affects your take-home pay because HMRC adjusts your tax code to collect the tax throughout the year. For employers, the Class 1A NI represents an additional cost on top of providing the benefit itself. Our calculator helps you see both sides clearly before committing to a benefit package.
P11D Explained
The P11D is the official HMRC form that employers use to report all taxable benefits in kind and expenses provided to employees and directors. The name comes from the form's reference number and has become synonymous with the taxable value of benefits — you will often hear people refer to a car's "P11D value" meaning its list price for BIK purposes.
When is P11D filed? Employers must submit P11D forms to HMRC by 6 July following the end of the tax year. For the 2025/26 tax year (6 April 2025 to 5 April 2026), the deadline is 6 July 2026. Employers must also give employees a copy of their P11D by the same date so employees can verify the figures and check their tax code is correct.
How does the P11D affect your tax code? Once HMRC receives your P11D, they adjust your tax code for the following year to collect the tax on your benefits. Your personal allowance is effectively reduced by the P11D value, meaning you pay more tax through PAYE each month. For example, if your P11D benefits total £5,000 and you are a 40% taxpayer, HMRC will collect an extra £2,000 over the year through your reduced tax code — roughly £167 per month less in your take-home pay.
Alongside the P11D, employers file a P11D(b) form summarising the total Class 1A NI due on all benefits. The Class 1A NI must be paid to HMRC by 22 July (19 July if paying by post).
Common Benefits in Kind and Their Tax Treatment
Not all employee benefits are taxed equally. Some are fully taxable, some are partially taxable, and others are completely exempt. Understanding the rules for each type helps you choose the most tax-efficient benefits package. Here is how the most common benefits are treated for 2025/26:
Company cars are the most significant BIK for most employees. The taxable value depends on the car's list price and its CO2 emissions — the lower the emissions, the lower the BIK percentage. Electric cars benefit from a remarkably low 2% rate, making them by far the most tax-efficient company car choice. Diesel cars that do not meet the Real Driving Emissions 2 (RDE2) standard incur a 4-percentage-point surcharge, capped at 37%.
Private health insurance is taxable at the full cost of the premium paid by the employer. If your employer pays £1,200 per year for your health cover, that £1,200 is your P11D value. Family cover is also fully taxable — even though your dependants are not employees.
Company phones and laptops are generally exempt from BIK provided the employer holds the contract (not the employee) and only one phone is provided per employee. Laptops and tablets are exempt if they are primarily for work purposes, even if some personal use occurs.
Cycle to Work schemes are fully exempt under the approved scheme rules. The employee hires the bicycle from the employer and the hire payments come from gross salary, saving both income tax and NI.
Trivial benefits costing £50 or less per occasion are exempt from BIK provided the benefit is not cash or a cash voucher, is not a reward for work performance, and is not part of a contractual arrangement. There is no annual cap for employees, though directors of close companies have a £300 annual limit.
Company Car BIK Rates 2025/26
The company car BIK rate is determined by the vehicle's CO2 emissions and, for low-emission cars, its electric-only driving range. For 2025/26, the rates range from 2% for zero-emission vehicles up to a maximum of 37% for the highest-polluting cars.
The key bands for 2025/26 are as follows: zero-emission electric vehicles attract a BIK rate of just 2%. Plug-in hybrid vehicles (PHEVs) with 1–50g/km CO2 are taxed between 2% and 14% depending on their electric range — the further a PHEV can travel on electric alone, the lower the rate. From 51g/km upwards, the rate increases in 1-percentage-point steps for each 5g/km band until it reaches the 37% maximum at 160g/km and above.
Diesel surcharge: Diesel cars that do not meet the RDE2 emissions standard have 4 percentage points added to their BIK rate (capped at 37%). This means a diesel car with 120g/km CO2 would have a BIK rate of 33% instead of 29% for an equivalent petrol car. RDE2-compliant diesels are treated the same as petrol.
For employees choosing a company car, the message is clear: electric vehicles offer enormous tax savings. A 40% taxpayer driving a £40,000 electric car pays just £320 per year in BIK tax (2% of £40,000 = £800, taxed at 40% = £320). The same taxpayer with a £40,000 petrol car emitting 130g/km would pay £4,960 per year (31% of £40,000 = £12,400, taxed at 40% = £4,960). That is a saving of £4,640 every year.
How to Calculate BIK Tax Step by Step
Calculating your benefit in kind tax follows a straightforward four-step process, though the details vary depending on the type of benefit:
Step 1: Identify the Benefit Type
Determine which category your benefit falls into — company car, health insurance, loan, or another type. This matters because each benefit type has different rules for calculating the taxable value. Company cars use a percentage of the list price based on CO2 emissions, while health insurance uses the full premium cost.
Step 2: Find the P11D Value
For company cars, the P11D value is the car's list price (including factory options, delivery charges, and VAT) minus the first registration fee and vehicle excise duty. For other benefits, the P11D value is typically the cost to the employer of providing the benefit. For interest-free loans, it is the loan amount multiplied by the HMRC official rate (2.25%) minus any interest you actually pay.
Step 3: Apply the BIK Percentage (for Cars)
For company cars, multiply the P11D list price by the appropriate BIK percentage based on the car's CO2 emissions and fuel type. This gives you the taxable benefit amount. For non-car benefits, the full P11D value is usually the taxable benefit — there is no additional percentage to apply.
Step 4: Multiply by Your Tax Rate
Take the taxable benefit and multiply it by your marginal income tax rate — 20% for basic rate, 40% for higher rate, or 45% for additional rate. Scottish taxpayers use their Scottish rates (19% to 48%). The result is the annual BIK tax you will pay. Divide by 12 for the monthly impact on your take-home pay.
Salary Sacrifice vs Benefit in Kind
Salary sacrifice is an arrangement where an employee gives up part of their gross salary in exchange for a non-cash benefit, such as additional pension contributions, childcare vouchers, or an electric car through a car lease scheme. The key tax advantage is that the sacrificed salary is no longer subject to income tax or National Insurance — both employee and employer save.
When salary sacrifice beats a standard BIK: Electric car salary sacrifice schemes are currently the most compelling example. By sacrificing salary for an electric car lease, the employee saves income tax and NI on the sacrificed amount, while the BIK tax on the electric car is just 2% of the list price. The net saving compared to buying or leasing the car personally can be 30–60% of the total cost.
For example, consider a higher-rate taxpayer sacrificing £500 per month for an electric car worth £42,000. The salary sacrifice saves £200 in income tax (40%) and £10 in employee NI (2%), costing only £290 net. The BIK tax is £42,000 x 2% x 40% / 12 = £28 per month. Total monthly cost: £318 versus £500+ if arranged privately. The employer also saves 15% NI on the £500 sacrificed salary (£75 per month).
When salary sacrifice is less favourable: If the benefit has a high BIK rate (such as a petrol car at 37%), the combined tax charge can exceed the savings from salary sacrifice. Salary sacrifice can also reduce your pensionable earnings and affect entitlement to statutory benefits like maternity pay if your salary drops below the Lower Earnings Limit. Always check these implications before entering a salary sacrifice arrangement.
Example Scenarios
Example 1: BMW 3 Series Company Car — Higher Rate Taxpayer
Taxpayer: Higher rate (40%)
Calculation:
List price (P11D): £35,000
CO2 120g/km → BIK percentage: 29%
Taxable benefit: £35,000 x 29% = £10,150
BIK tax at 40%: £10,150 x 40% = £4,060 per year (£338/month)
Employer Class 1A NI: £10,150 x 15% = £1,522.50
Total annual cost: Employee pays £4,060 in tax + employer pays £1,522.50 in NI = £5,582.50 combined
Example 2: Private Health Insurance — Basic Rate Taxpayer
Taxpayer: Basic rate (20%)
Calculation:
P11D value: £1,200 (full premium)
BIK tax at 20%: £1,200 x 20% = £240 per year (£20/month)
Employer Class 1A NI: £1,200 x 15% = £180
Verdict: At just £20 per month in extra tax, employer-provided health insurance is excellent value compared to buying a policy privately (which would cost the full £1,200 from taxed income — effectively £1,500 of gross salary for a 20% taxpayer).
Example 3: Electric Company Car — Huge Savings vs Petrol
Taxpayer: Higher rate (40%)
Calculation:
List price (P11D): £42,000
CO2 0g/km → BIK percentage: 2%
Taxable benefit: £42,000 x 2% = £840
BIK tax at 40%: £840 x 40% = £336 per year (£28/month)
Employer Class 1A NI: £840 x 15% = £126
Comparison with petrol equivalent:
A comparable petrol car (£42,000, 130g/km CO2) would have a BIK rate of 31%.
Taxable benefit: £42,000 x 31% = £13,020
BIK tax at 40%: £13,020 x 40% = £5,208 per year
Annual saving by choosing electric: £5,208 − £336 = £4,872
Over a typical 3-year lease, the electric car saves £14,616 in BIK tax alone.
How to Use This Calculator
Our Benefit in Kind Calculator gives you an instant, accurate picture of the tax you will pay on employee benefits for the 2025/26 tax year. Follow these three steps:
Step 1: Select Your Benefit Type
Choose the type of benefit from the dropdown menu. The calculator dynamically shows the relevant input fields for each benefit type. For company cars, you will see fields for the list price, CO2 emissions, and fuel type. For health insurance, you enter the annual premium. For interest-free loans, enter the loan amount and any interest you pay.
Step 2: Enter the Details and Choose Your Tax Band
Fill in the benefit-specific fields. Select your tax band — basic (20%), higher (40%), or additional (45%). If you are a Scottish taxpayer, switch the tax region to Scotland and select your Scottish tax band (19% to 48%). The calculator automatically updates as you type.
Step 3: Review Your Results
The results panel shows four key figures: your annual BIK tax, the monthly impact on your take-home pay, the P11D taxable value, and your employer's Class 1A NI cost. The detailed breakdown table shows exactly how each figure was calculated, including the BIK percentage for company cars and the tax rate applied. Use the print or copy buttons to save your results.
Understanding Your Results
Annual BIK Tax You Pay
This is the income tax you will pay on the benefit during the 2025/26 tax year. HMRC collects this by adjusting your tax code, so your monthly take-home pay is reduced accordingly. It is not a separate payment — it comes out through your normal PAYE.
P11D Taxable Value
This is the cash equivalent of your benefit as reported on your P11D form. For company cars, it is the list price multiplied by the BIK percentage. For other benefits, it is typically the cost to the employer. This figure is what HMRC uses to adjust your tax code.
Employer Class 1A NI
Your employer pays Class 1A National Insurance at 15% on the P11D taxable value. This is an additional cost to the employer on top of providing the benefit. It is reported on the P11D(b) form and paid to HMRC by 22 July each year. This cost is often overlooked when employers assess the true cost of providing benefits.
Monthly Impact on Take-Home
This is the annual BIK tax divided by 12, showing how much less you will receive in your monthly pay packet. For a company car with £4,060 annual BIK tax, the monthly impact is approximately £338 less take-home pay. Compare this with the value of the benefit to decide whether it represents good value for you.
Official Sources & References
Frequently Asked Questions
A benefit in kind is any non-cash perk provided by your employer that has a monetary value. This includes company cars, private health insurance, gym memberships, interest-free loans, and living accommodation. HMRC taxes these benefits because they form part of your overall compensation. The taxable value is reported on form P11D and collected through your PAYE tax code. The employee pays income tax on the benefit and the employer pays Class 1A National Insurance at 15%.
Company car BIK tax is calculated using three inputs: the car's P11D list price (including options and VAT, excluding registration fee and road tax), the CO2 emissions to determine the BIK percentage (2% for electric up to 37% for high emitters), and your income tax rate. The formula is: List Price x BIK % x Tax Rate = Annual BIK Tax. For example, a £35,000 car with 120g/km CO2 has a 29% BIK rate: £35,000 x 29% = £10,150 taxable benefit. At 40% tax, you pay £4,060 per year.
A P11D is the HMRC form that employers submit by 6 July each year, listing all taxable benefits in kind provided to each employee during the previous tax year. The P11D value is the cash equivalent used to calculate your tax liability. Employers must also give employees a copy by the same date. The accompanying P11D(b) form summarises the total Class 1A NI due, payable by 22 July. Many employers now payroll benefits instead, meaning the tax is collected in real time through PAYE rather than through a year-end P11D adjustment.
Generally no. HMRC provides an exemption for one mobile phone per employee provided the contract is between the employer and the network provider (not the employee). Laptops and tablets used primarily for work are also exempt, even with some personal use. A second phone, however, would be taxable at its market value. If an employee purchases their own phone and the employer reimburses them, the reimbursement is taxable income unless it falls within the trivial benefits exemption (under £50).
Electric company cars with zero CO2 emissions have a BIK rate of just 2% for 2025/26. This means the taxable benefit is only 2% of the car's list price. For a £40,000 electric car, the taxable benefit is £800. A basic rate (20%) taxpayer pays £160 per year, a higher rate (40%) taxpayer pays £320, and an additional rate (45%) taxpayer pays £360. This compares extremely favourably with petrol or diesel equivalents where BIK rates of 25–37% apply.
Employers pay Class 1A National Insurance at 15% on the taxable value of most benefits in kind. This is calculated on the same P11D value used for the employee's tax. For a company car with a £10,000 taxable benefit, the employer's Class 1A NI is £1,500. This is reported on the P11D(b) form and paid to HMRC by 22 July each year. Some benefits payrolled in real time attract Class 1 NI instead. Exempt benefits like pension contributions, cycle-to-work bikes, and workplace meals do not incur Class 1A NI.
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