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
(%)
022345
1-50>13022345
1-5070-12955678
1-5040-698891011
1-5030-391212131415
1-50<301414151617
51-541515161718
55-591616171819
60-641717181920
65-691818192021
70-741919202121
75-792020212121
80-842121222222
85-892222232323
90-942323242424
95-992424252525
100-1042525262626
105-1092626272727
110-1142727282828
115-1192828292929
120-1242929303030
125-1293030313131
130-1343131323232
135-1393232333333
140-1443333343434
145-1493434353535
150-1543535363636
155-1593636373737
160-1643737373737
165-1693737373737
170+3737373737

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.