Company cars
A company car can be used for business and private journeys. Its value is a taxable benefit in kind, calculated from the car’s list price and CO2 emissions.
- The list price is multiplied by a percentage linked to CO2 emissions.
- A 4% supplement applies to diesel cars unless they meet Euro 6d standards.
- The percentage is capped at 37%.
- The list price must include accessories fitted.
- Employee capital contributions of up to £5,000 reduce the taxable list price.
2026/27 car benefit percentages
| CO2 emissions (g/km) | % of car’s price taxed |
|---|---|
| 0 | 4 |
| 1–50: electric range over 130 | 4 |
| 1–50: electric range 70–129 | 7 |
| 1–50: electric range 40–69 | 10 |
| 1–50: electric range 30–39 | 14 |
| 1–50: electric range under 30 | 16 |
| 51–54 | 17 |
| 55–59 | 18 |
| 60–64 | 19 |
| 65–69 | 20 |
| 70–74 | 21 |
| 75–79 | 21 |
| 80–84 | 22 |
| 85–89 | 23 |
| 90–94 | 24 |
| 95–99 | 25 |
| 100–104 | 26 |
| 105–109 | 27 |
| 110–114 | 28 |
| 115–119 | 29 |
| 120–124 | 30 |
| 125–129 | 31 |
| 130–134 | 32 |
| 135–139 | 33 |
| 140–144 | 34 |
| 145–149 | 35 |
| 150–154 | 36 |
| 155 and above | 37 |
Car fuel benefit
If an employer pays for private fuel in a company car, this is a separate taxable benefit, calculated by multiplying the car benefit percentage by the statutory fuel figure of £29,200. It’s reduced pro rata if private fuel stops part-way through the year, and to nil if the employee pays for all private fuel. Partial payments don’t remove it.
Van benefit
- A van benefit of £4,170 applies if a van is available for private use.
- A fuel benefit of £798 applies if employer-paid private fuel is provided.
- No charge applies if a restricted private use condition is met each year.
Mileage allowance payments
Employers can pay employees who use their own vehicle for work a tax-free mileage allowance up to HMRC’s approved rates without reporting them. If an employee receives less, they can claim tax relief on the difference.
| Vehicle type | Pence per mile |
|---|---|
| Cars and vans: up to 10,000 miles | 55 |
| Cars and vans: over 10,000 miles | 25 |
| Bicycles | 20 |
| Motorcycles | 24 |
Who qualifies
- Company cars: employees and directors offered a company car by their employer.
- Mileage allowances: employees and directors using their own car for business journeys. Commuting to a regular workplace doesn’t qualify.
- Self-employed people don’t receive car benefits through PAYE but can claim business mileage as an expense.