LeasingOptions Logo
PersonalBusiness
Call Us
e.g. BMW 3 Series
BackClose
0161 826 9716

Speak to one of our team

0161 826 9716

Open today: 8.30am - 6pm | See all hours

What is Benefit in Kind Tax

What is Benefit in Kind (BIK) Tax? How is it calculated? Find the latest answers to all your BIK Car Tax questions here with Leasing Options.

If you're lucky enough to be supplied with a company car then you could be liable to pay a charge known as Benefit in Kind (BIK) tax.1 The amount you're required to pay will depend on three things:

  • Price of your vehicle (P11D value)

  • Your annual earnings
  • CO2 emissions of the vehicle

As with all taxes, the rules seem to alter constantly, and recent changes that came in to force on 6th April 2020 aim to provide the most accurate possible calculation of emissions. 

How is BIK tax calculated?

To work out the rate of BIK tax you will pay on a company car, please visit the Government website here.

What Affects BIK?

It’s important to know that even the smallest change to the options on a vehicle, even something as seemingly insignificant as adding mats, can impact the amount of tax that needs to be paid. 

If you're in any doubt about the rate that will apply to your chosen vehicle be sure to get in touch with HMRC to confirm.

BIK tax for vans

If your company provides you with a van which has zero tailpipe emissions for personal use, that van is subject to a van benefit charge. 

The current rate of charge is set at £3,500 (2021-22 financial year). You have to pay 100% of the van benefit charge. However, the cash equivalent of the van benefit charge was reduced to £0. 

BIK tax for electric cars and hybrids

The Government introduced a new Benefit in Kind (BIK) savings on efficient plug-in hybrid electric vehicles and battery electric vehicles from 6th April 2020, in a bid to increase the uptake of fully electric cars among fleets. 

Company car drivers will now pay 1% BIK on 100% electric vehicles (EVs) throughout the 2021/22 tax year.1

This is a huge incentive for company car drivers to make the move to an EV. Here are a couple of examples of how much BIK you would pay for different models (based on 2021/2022 tax year) compared with our EV recommendation, the Nissan LEAF:

100% electric Nissan LEAF Acenta 40kWh Auto
            - in 20% Tax band - £4.74 a month
            - in 40% tax band - £9.48 a month

 Peugeot 2008 SUV 1.2L PureTech Active Premium 100 S&S
            - in 20% Tax band - £97.07 a month
            - in 40% tax band - £194.13 a month      

Ford Focus 1.0T EcoBoost Mild Hybrid ST-Line Edition 155PS
            - in 20% Tax band - £111.26 a month
            - in 40% tax band - £222.53 a month    

BMW 3 Series Saloon 318d Sport
           - in 20% Tax band - £169.48 per month

            - in 40% tax band - £338.96 a month

Looking for a company car?

Are you ready to discover your perfect company car? Take a look at our business lease deals.

Alternatively, check out our personal lease deals. 

This information is correct at time written but always consult a tax specialist relevant to your individual needs.

BIK tax FAQs

How does BIK tax work?

Benefit In Kind (BIK) tax is the amount you're required to pay dependent on three things:

  • Price of your vehicle (P11D value)
  • Your annual earnings
  • CO2 emissions of the vehicle

How much BIK tax will I pay?

To work out the rate of BIK tax you will pay on a company car, please visit the Government website here.

What is BIK tax on vans?

Tax on your van depends on whether you use it purely for business or for both business and personal reasons.

  1. Please seek independent tax advice. 

Nissan Sponsership

Car Leasing FAQs

Can anyone else drive my vehicle?

We believe in providing flexibility for our customers, which means our vehicles can be driven by a wide range of people:

  • Business users
    Company employees, employee’s spouses, partners and immediate family (children, siblings, parents etc.), as long as they meet the driver-eligibility criteria.
  • Personal users
    The driver, their spouse or partner and immediate family (children, siblings, parents etc.), as long as they meet the driver-eligibility criteria.

Below is the Fuel & Go driver-eligibility criteria:

  • All drivers must be aged between 21-70.
  • They must be in possession of a full UK/EU driving licence that has been valid for at least 12 months.
  • Drivers must not have more than two own-fault claims in the past 24 months.
  • Anyone using the vehicle cannot have more than 6 points on their driving licence.
  • They must not have received a driving ban in the past 60 months.
  • Drivers must not have been advised to stop driving by a medical professional or the DVLA due to a medical condition.

What do you get with the Fuel & Go package?

Our Fuel & Go leasing service ensures you get all the cover you need for your leased vehicle. The key benefits of the package include:

  • Guaranteed Maintenance & Breakdown – access to a 48 hour relief vehicle if it can no longer be driven, or is left by the roadside.
  • Shortfall Protection – Help with finance arrangements if the vehicle is written off.
  • Accident Management – All accident claims are processed by a dedicated team.
  • Own Damage Protection – Repair cost related to accident, fire, theft and more are covered.
  • Glass Protection – Body glass and windscreen are covered.
  • MID updates – Regular and complete Motor Insurance Database updates.

All you have to do is add fuel and enjoy making the most of your leased vehicle.

What isn’t included in the Fuel & Go package?

At the moment Arval, the funder for our Fuel & Go package, doesn’t cover for personal injury for the named driver. Any passengers would be covered under ‘third party’ within the policy. Personal belongings are also not covered within the policy

What are the pros and cons of leasing vs buying?

Not only does leasing offer great flexibility and peace of mind, you won't be left with a vehicle facing negative equity when your contract is up. What's more, due to the financial flexibility, leasing often means you can drive a newer or higher spec car than you would have been able to afford if paying outright..

If you settle the contract early, you will be required to pay a termination fee.

If you exceed your agreed annual mileage allowance, you will be required to pay an excess-mileage fee.

At the end of your contract, you will be required to pay for any damage to the vehicle, with the exception of "fair wear-and-tear".

To learn more about the benefits of leasing, our guides section has more indepth articles.

Ready to find your next vehicle?

Audi A8
Nissan NV200
Volkswagen Amarok