A Guide to BIK - What is BIK Tax?

Glossary

BIK – Benefits-in-kind

Benefits provided by your employer that are not included in your wages such as a company car or private medical insurance paid for by your employer.

Company Car BIK Tax

If you are entitled to a company car through your employer that allows you to use the vehicle for private use, then you may be liable to pay the BIK Tax.

There are, however, a few exceptions to this rule, for example, someone who earns less than their personal tax allowance would not be liable for BIK Tax.

P11D Value

The P11D Value is how HMRC reference the cars list price

CO2 Emissions

The CO2 Emissions the vehicle emits

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Image for display purpose only

Establish if BIK tax is payable by you

You will be liable if: The car will be used for personal use. This includes taking the car home on evenings and weekends and driving to and from your place of work.

You will not be liable if: The car is for business use only, will not be used privately and is not available for private use.

Work out how much BIK tax you are liable to pay on your chosen vehicle:

You will need:

  1. The vehicle list price (aka P11D)
  2. The vehicle CO2 emissions
  3. The vehicle fuel type (diesel engines liable to a 4% surcharge*)
  4. Your BIK Tax Band
  5. Your personal tax rate

Note: If you are a high rate earner with an expensive company car that is high in CO2 emissions then you will pay the most in BIK Tax. On the other hand, if you choose a lower priced car with low fuel emissions you can actually reduce your tax liability.

BIK Tax Value = (P11D x BIK Tax Band) x Personal Tax Band

Current BIK tax bands

BIK tax bands are currently capped at a maximum of 37% however these are adjusted year on year.
You can see the current Bik Tax banding below:

Cars registered before 6 April 2020:
CO2
(g/km)
Electric range
(miles)
2020-21
(%)
2021-22
(%)
2022-23
(%)
0 N/A 0 1 2
1-50 >130 2 2 2
1-50 70-129 5 5 5
1-50 40-69 8 8 8
1-50 30-39 12 12 12
1-50 <30 14 14 14
51-54 15 15 15
55-59 16 16 16
60-64 17 17 17
65-69 18 18 18
70-74 19 19 19
75-79 20 20 20
80-84 21 21 21
85-89 22 22 22
90-94 23 23 23
95-99 24 24 24
100-104 25 25 25
105-109 26 26 26
110-114 27 27 27
115-119 28 28 28
120-124 29 29 29
125-129 30 30 30
130-134 31 31 31
135-139 32 32 32
140-144 33 33 33
145-149 34 34 34
150-154 35 35 35
155-159 36 36 36
160+ 37 37 37
Cars registered from 6 April 2020:
CO2
(g/km)
Electric range
(miles)
2020-21
(%)
2021-22
(%)
2022-23
(%)
0N/A012
1-50>130012
1-5070-129345
1-5040-69678
1-5030-39101112
1-50<30121314
51-54131415
55-59141516
60-64151617
65-69161718
70-74171819
75-79181920
80-84192021
85-89202122
90-94212223
95-99222324
100-104232425
105-109242526
110-114252627
115-119262728
120-124272829
125-129282930
130-134293031
135-139303132
140-144313233
145-149323334
150-154333435
155-159343536
160-164353637
165-169363737
170+373737

*All diesel cars face a 4% surcharge; however, a diesel car is still usually the best option for high mileage drivers, you may be able to recover the difference in the savings on fuel costs.
Note: You may be eligible for a reduced BIK car tax rating if you only use your company car part time. You can find out more about this on the HMRC website.

Example Calculation

Say you were offered a XC40 R-Design Pro T5 Twin Engine Automatic as a company car (BIK)

The P11D value of that car is £42,305, the car emits 43g/km of CO2, therefore the BIK tax band is 8% for the 2020/2021 financial year.

£42,305 x 8% = BIK taxable value of £3384.40

If you pay 20% personal income tax then

£3384.40 x 20% = £676.88 (the amount of annual BIK tax you would pay).


Salary Sacrifice Schemes

If you are part of a salary sacrifice scheme, you may exchange part of your salary to be eligible for company car benefits.

If you decide to take this option, then you will have to pay income tax on either the value of the car OR the amount of salary sacrificed (the tax will apply to the greater of the two). You will also pay national insurance on top of this.

BIK Vehicles Available

Volvo XC60

  • T8 PLUGIN HYBRID R DESIGN
    • BIK £119.06 PER MONTH FROM 6TH APRIL
    • A REDUCTION OF £26.47 PER MONTH
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Image for display purpose only

Volvo V90 

  • T8 PLUGIN HYBRID R DESIGN 
    • BIK £99.33 PER MONTH FROM 6TH APRIL 
    • A REDUCTION OF £59.60 PER MONTH

Volvo XC40

  • PLUGIN HYBRID R DESIGN
    • BIK £81.70 PER MONTH FROM 6TH APRIL
    • A REDUCTION OF £27.23 PER MONTH
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At Volvo North East Business Centre, we want a business deal that is right for you and your employer.

We can offer advice to help you ensure you get the right car at the right price and answer any questions you may have to help find the right car for you.

Why not contact our team on 0191 516 8203 to speak with a member of the team to find out more, or fill in the form below?

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