When an employer’s car is made available for the private use of an employee, the income tax and National Insurance (NI) implications are different from an employee receiving a cash salary – the receipt of a car is a common benefit in kind (BiK).

Income tax and NI

The level of income tax and NI is determined by the list price (not purchase price) of the car which is then subject to a percentage based on the car’s CO2 emissions – a 4% surcharge is added to diesel cars not meeting the RDE2 emissions standard.

The maximum rate is 37%, but the rate could be as low as 2% for cars with zero emissions.