Benefit in kind and company car tax

BENEFIT in kind tax rates for company car users are calculated according to a car's carbon dioxide emissions.

The more polluting the car, the higher the tax rate. Tax liability is based on the car's official price, known as the 'P11D', multiplied by the appropriate BIK rate and the user's income tax rate.

For example, a diesel car costing £20,000 with CO2 emissions of 111g/km has a benefit in kind rate of 24 per cent. The car tax bill for someone paying 20 per cent income tax would be: 20,000 x 24% = £4,800 benefit in kind x 20% income tax = £960 annual company car tax, or £80 a month.

Zero emission electric vehicles attract 9 per cent BIK in 2017/18 and 13 per cent in 2018/19.