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.
- Please seek independent tax advice.