If a business provides its employees with a car for business and personal use, it will be subject to company car tax. If you have use of a car via a company car scheme, the benefit received is taxed as a benefit-in-kind (BiK).
A Benefit-in-kind tax refers to a benefit that employees get from their employer. BiK tax in this case is often referred to as company car tax – it’s referred to as such because HMRC view the company car as a benefit outside of usual work equipment so you have to be taxed on that benefit.
The amount of tax you pay on your company car will depend upon the vehicle you drive. The company car tax rate is calculated based on the carbon dioxide emissions and the type of fuel the car uses.
It will also depend on the value of the car. Generally, the higher the CO2 emissions your company car emits and the higher the price of your car, the higher the benefit-in-kind tax will be.