What is BIK (benefit in kind) car tax and how do I calculate it?

A:

Benefit-in-kind (or BIK) is a tax on employees who receive benefits or perks on top of their salary. If you have a company car for private use, you will have to pay a BIK contribution, or company car tax.

Every car has a BIK percentage banding. This is based on CO2 emissions, and a P11D value, which is the list price, including extras and VAT, but without the first year registration fee and vehicle tax.

How do I calculate my BIK tax?

To calculate the company car - or BIK - tax, multiply the P11D value by the BIK percentage banding, then multiply that figure by your tax band - i.e. 20% or 40%. This will give you your annual tax. Divide by 12 to get your monthly outgoing.

For a simpler way, use our Company Car Tax Calculator that will allow you to easily compare different cars against each other.