Sarah Bradford highlights changes to the company car tax rules in 2026/27 and beyond.
A company car can be a valuable benefit; but it can also be an expensive one, tax-wise. Where a car is provided for an employee’s private use without a transfer of ownership, the employee faces a tax charge on the benefit of that private use. Here, it is important to note that the benefit-in-kind charge is triggered if the car is available for private use; there does not need to be any actual private use for the charge to apply.
The amount charged to tax depends predominantly on the list price of the car and any optional accessories, and on its CO2 emissions. The level of the car’s CO2 emissions determines the percentage of the list price that is charged to tax. The list price is reduced for capital contributions up to a maximum of £5,000.
