Understanding Benefit in Kind (BIK) tax is essential for any business that operates a fleet. These tax bands determine how much company car drivers pay for the benefit of using a vehicle provided by their employer. With rates confirmed through to 2030, fleet operators have a clear roadmap to plan future costs and make better vehicle choices.
This guide explains how BIK is calculated, outlines the current rates, and explores what they mean for your fleet strategy over the next five years.
What Is BIK and How Is It Calculated?
BIK is a tax applied to benefits provided by an employer that are not included in salary. Company cars fall into this category, and the rate you pay depends on several factors:
- CO₂ emissions: Lower emissions mean lower tax.
- Fuel type: Diesel cars that fail to meet the RDE2 standard face a 4% surcharge.
- Electric range: Plug in hybrids are assessed on how far they can travel on battery power alone.
The BIK rate is expressed as a percentage. That percentage is applied to the car’s list price to determine the taxable value. For fleets, this means the type of vehicles chosen has a direct impact on both business costs and employee tax bills.
Current BIK Bands for 2025 to 2030
The government has confirmed BIK rates up to the 2029–30 tax year. The table below shows the progression of rates for different CO₂ bands and electric ranges.
BIK Rates for Company Cars
| CO₂ Emissions (g/km) | 2024–25 | 2025–26 | 2026–27 | 2027–28 | 2028–29 | 2029–30 |
| 0 (Zero emission / Electric) | 2% | 3% | 4% | 5% | 7% | 9% |
| 1–50, Electric range >130 miles | 2% | 3% | 4% | 5% | 7% | 9% |
| 1–50, 70–129 miles | 5% | 6% | 7% | 8% | 10% | 12% |
| 1–50, 40–69 miles | 8% | 9% | 10% | 11% | 13% | 15% |
| 1–50, 30–39 miles | 12% | 13% | 14% | 15% | 17% | 19% |
| 1–50, <30 miles | 14% | 15% | 16% | 17% | 19% | 21% |
| 51–54 | 15% | 16% | 17% | 18% | 20% | 21% |
| 55–59 | 16% | 17% | 18% | 19% | 21% | 22% |
| 60–64 | 17% | 18% | 19% | 20% | 22% | 23% |
| 65–69 | 18% | 19% | 20% | 21% | 23% | 24% |
| 70–74 | 19% | 20% | 21% | 22% | 24% | 25% |
| 75–79 | 20% | 21% | 22% | 23% | 25% | 26% |
| 80–84 | 21% | 22% | 23% | 24% | 26% | 27% |
| 85–89 | 22% | 23% | 24% | 25% | 27% | 28% |
| 90–94 | 23% | 24% | 25% | 26% | 28% | 29% |
| 95–99 | 24% | 25% | 26% | 27% | 29% | 30% |
| 100–104 | 25% | 26% | 27% | 28% | 30% | 31% |
| 105–109 | 26% | 27% | 28% | 29% | 31% | 32% |
| 110–114 | 27% | 28% | 29% | 30% | 32% | 33% |
| 115–119 | 28% | 29% | 30% | 31% | 33% | 34% |
| 120–124 | 29% | 30% | 31% | 32% | 34% | 35% |
| 125–129 | 30% | 31% | 32% | 33% | 35% | 36% |
| 130–134 | 31% | 32% | 33% | 34% | 36% | 37% |
| 135–139 | 32% | 33% | 34% | 35% | 37% | 37% |
| 140–144 | 33% | 34% | 35% | 36% | 37% | 37% |
| 145–149 | 34% | 35% | 36% | 37% | 37% | 37% |
| 150–154 | 35% | 36% | 37% | 37% | 37% | 37% |
| 155–159 | 36% | 37% | 37% | 37% | 37% | 37% |
| 160–164 | 37% | 37% | 37% | 37% | 37% | 37% |
| 165+ | 37% | 37% | 37% | 37% | 37% | 37% |
Note: Diesel cars that do not meet RDE2 standards attract a 4% surcharge, up to the 37% cap.
What These Changes Mean for Fleets
The BIK structure is designed to encourage the adoption of cleaner vehicles. For fleet managers, the implications are clear:
- Electric vehicles remain the most cost effective choice. Even with rising rates, they remain far below the liability attached to petrol or diesel cars.
- Hybrids are still viable. Plug in hybrids with a long electric range can reduce tax exposure, though less efficient models are losing ground.
- High emission cars are increasingly expensive. Each year brings a higher percentage, making these vehicles a long term cost burden.
- Forward planning is possible. With BIK bands fixed until 2030, fleet budgets can be modelled accurately for years in advance.
The Road Ahead for Fleet Planning
The confirmed BIK bands make one point clear. Fleets that move quickly towards zero and low emission vehicles will benefit the most, both financially and operationally. Electric cars are no longer a niche choice but a central part of effective fleet management.
By factoring BIK rates into procurement and renewal decisions today, businesses can protect their budgets, meet sustainability goals, and provide employees with vehicles that are efficient and future proof. For fleet managers, the next five years present a clear opportunity to align tax strategy with long term cost savings. If you are looking for fleet insurance, or business car insurance, get in touch with us today for a quote tailored to your business.