Electric company-car tax: BIK worked examples for 2028/29 and 2029/30
Turn P11D value, the electric-car benefit percentage and your income tax rate into an estimate, without confusing BIK with road tax.
The direct answer
Company-car income tax is P11D value × BIK percentage × the employee’s applicable income-tax rate. For a £40,000 zero-emission car and a simplified 20% rate, the published 7% BIK gives £560 in 2028/29; 9% gives £720 in 2029/30. VED is separate.
Published future BIK percentages; simplified full-year employee income-tax examples. These examples explain the rules; they are not an individual tax assessment. Check DVLA or payroll for the amount payable.
A percentage of value is not the final tax bill
Company-car benefit-in-kind is an income-tax calculation for the employee’s private-use benefit. Annual road tax is a separate vehicle charge. Keeping those amounts in separate columns makes it easier to understand an employer’s quote and avoids adding the same cost twice.
The starting value is the confirmed P11D value for the exact car and relevant accessories. Do not simply substitute the monthly lease rental, a discounted cash price or the vehicle’s resale value. Ask payroll or the employer for the value and the benefit details they will report.
Three steps for a £40,000 electric car in 2028/29
Using the published 7% zero-emission benefit percentage, first calculate the taxable benefit: £40,000 × 7% = £2,800. Then apply the illustrative employee income-tax rate. At 20%, £2,800 × 20% = £560 for a full year. At 40%, £2,800 × 40% = £1,120.
Finally, divide by 12 to get budgeting equivalents: approximately £46.67 or £93.33 per month. The 7% figure is the benefit percentage; it is not £2,800 of tax. Multiplying by the employee’s applicable rate is the essential second step.
What changes in 2029/30 if the P11D value stays the same?
At the published 9% benefit percentage, a £40,000 P11D value produces a £3,600 taxable benefit. At 20%, the annual illustration is £720, or £60 per month. At 40%, it is £1,440, or £120 per month.
Compared with the 2028/29 examples, the increases are £160 per year at 20% and £320 per year at 40%. The P11D value has not changed in this calculation: the different benefit percentage explains the increase. Keep the tax-year labels beside any comparison rather than quoting a monthly amount without its year.
An options sensitivity check
If a £2,000 relevant option raises the confirmed P11D value from £40,000 to £42,000, the extra taxable benefit at 7% is £140. At an illustrative 40% income-tax rate, that means £56 more tax per year, or about £4.67 per month. At 9%, the same option gives £180 more benefit and £72 more annual tax at 40%.
That BIK sensitivity is different from the vehicle-tax supplement boundary. A P11D calculation and an expensive-car list-price test serve different purposes; one number should not be assumed to establish the other without checking its components.
When to take the example to payroll
These examples assume full-year availability and one income-tax rate applying to the whole benefit. Real tax can differ if the benefit spans tax bands, the car is available for only part of a year, personal contributions apply or salary sacrifice changes the arrangement. Scottish income-tax bands may also make a simple percentage illustration unsuitable.
The calculator models zero-emission cars only and does not calculate employer National Insurance, corporation-tax effects or the net cost of a salary-sacrifice offer. Ask payroll for the cash pay before and after the arrangement, the reported benefit and the total effect on take-home pay. Compare that result with your current transport costs, rather than treating the BIK estimate as the entire cost of having the car.
Worked examples: inputs and results
Published future BIK percentages; simplified full-year employee income-tax examples. Hypothetical passenger cars, no exemptions. Annual-payment amounts; monthly figures are budgeting equivalents.
| Example / inputs | Taxable benefit | Annual income tax | Monthly equivalent |
|---|---|---|---|
| £40,000 P11D — 2028/29, 20% illustrative tax rateP11D £40,000 · 2028/29 · 20% income tax | £2,800 | £560 | £46.67 |
| £40,000 P11D — 2028/29, 40% illustrative tax rateP11D £40,000 · 2028/29 · 40% income tax | £2,800 | £1,120 | £93.33 |
| £40,000 P11D — 2029/30, 20% illustrative tax rateP11D £40,000 · 2029/30 · 20% income tax | £3,600 | £720 | £60 |
| £40,000 P11D — 2029/30, 40% illustrative tax rateP11D £40,000 · 2029/30 · 40% income tax | £3,600 | £1,440 | £120 |
Calculated using the published assumptions checked on 14 October 2026. Read the calculator methodology and exclusions.
Evidence you can check
Official sources opened and checked on 14 October 2026. Examples and comparisons are our own calculations, rather than quotes for a vehicle.
Government information is reused under the Open Government Licence v3.0. EV Tax Guide is independent of HMRC and DVLA. No independent professional tax review is claimed.
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