This article explains how to work out the taxable value of the most common benefits in kind for the 2026 to 2027 UK tax year, including company cars, vans, fuel, loans, medical cover, relocation and accommodation. A companion article, "Benefits in kind, P11D and Class 1A National Insurance: the basics," covers the reporting forms, deadlines and payrolling rules.
How is the company car benefit worked out?
The taxable benefit of a company car is the car's list price multiplied by an appropriate percentage driven by the car's carbon dioxide (CO2) emissions. Start with the manufacturer's list price including most accessories, add the price of any qualifying accessories fitted later, and deduct any capital contribution the employee makes towards the cost (capped at £5,000). Then apply the appropriate percentage for the car's CO2 figure to arrive at the cash equivalent. Lower-emission cars attract a much lower percentage than high-emission cars, and the scale rises with emissions up to a capped maximum. A minimum list price of £1.00 and the £5,000 cap on capital contributions apply, while the appropriate-percentage tables are published on GOV.UK and increase each year.
How does the car benefit work for electric and low-emission cars?
Electric and low-emission cars are taxed far more lightly than petrol or diesel cars, although the rates are rising over time. For 2026 to 2027 the appropriate percentages for zero-emission cars and cars producing less than 75g of CO2 per kilometre increase by a further percentage point, with the band for the lowest-emission cars at the low end of the scale and a maximum of 21% for cars under 75g per km. Cars in the 1 to 50g per km range also depend on their zero-emission (electric-only) mileage, so the P11D record requires that figure. Fully electric company cars therefore still produce a taxable benefit, but a relatively small one. Separately, if you provide workplace charging for an employee's own fully electric car, or charge a company electric car, there is generally no taxable benefit to report.
What is car fuel benefit and how is it calculated?
Car fuel benefit arises when you provide fuel for private journeys in a company car and the employee does not fully reimburse you. It is calculated by applying the same appropriate percentage used for the car benefit to a fixed multiplier set by HMRC, rather than to actual fuel costs. For the 2026 to 2027 tax year the car fuel benefit multiplier is £29,200, up from £28,200 in 2025 to 2026. Because the charge is based on a fixed figure and not on fuel used, providing free private fuel can be expensive for both the employee's tax and your Class 1A National Insurance, and it is not reduced just because private mileage is low. The charge is removed only if the employee reimburses you for the full cost of all private fuel, or if private fuel is genuinely not provided.
What is van benefit and van fuel benefit?
If you make a company van available for an employee's private use beyond ordinary commuting, a flat-rate van benefit applies. For 2026 to 2027 the van benefit charge is £4,170, and where you also provide fuel for private use the van fuel benefit charge is £798. These are standard flat figures rather than amounts based on the individual van, and they can be reduced where the van is unavailable for at least 30 consecutive days, where the employee makes payments for private use, or where the van is shared. A zero-emission van attracts a van benefit charge of nil.
How are beneficial and interest-free loans taxed?
A beneficial loan is one you provide interest-free, or at a rate below HMRC's official rate. The benefit is broadly the difference between the interest the employee actually pays and the interest that would have been due at the official rate. For 2026 to 2027 the official rate of interest is 3.75%. There is an important exemption: if the total outstanding balance of all an employee's beneficial loans stays below £10,000 throughout the whole tax year, there is no benefit to report. Where the exemption does not apply, you report the benefit on the P11D and pay Class 1A National Insurance on it; beneficial loans cannot be payrolled under the voluntary rules. If you write off a loan, that is reported separately and is generally subject to Class 1 National Insurance rather than Class 1A.
How is private medical insurance reported?
Private medical and dental insurance and treatment you provide or pay for is generally a taxable benefit. You report the cost on the P11D in the section for private medical treatment or insurance and pay Class 1A National Insurance on it. Some medical items are exempt and do not need to be reported, including one health screening or medical check per year, eye tests required for screen use, treatment for work-related injuries or illness, and up to £500 of recommended medical treatment to help an employee return to work after at least 28 consecutive days off sick. Where an exemption does not cover the item, the cash equivalent is the cost to you, less any amount the employee contributes.
How is qualifying relocation support treated?
When an employee relocates for work, some relocation costs are exempt up to a limit. Qualifying relocation expenses and benefits are exempt up to £8,000; only the amount above £8,000 is reportable. Where the qualifying costs exceed £8,000, you report the excess on the P11D and pay Class 1A National Insurance on the amount above the threshold. Costs that do not qualify as eligible relocation expenses are reportable in full and appear in the non-qualifying relocation lines of the form. It is worth checking carefully which costs are eligible, because the £8,000 exemption only applies to qualifying expenses and benefits that meet HMRC's conditions.
How is living accommodation taxed?
Living accommodation you provide is usually a taxable benefit unless a specific exemption applies. The taxable value is broadly the greater of the property's annual value or the rent you pay, with adjustments for part-year availability, shared use and business use, and a reduction for any rent the employee pays you. Where the cost of providing the accommodation is more than £75,000, an additional charge applies on top of the basic value. Certain accommodation is exempt, including accommodation necessary or customarily provided for the proper performance of the job, and accommodation provided to protect an employee facing a special security threat, although directors face tighter conditions. Living accommodation is reported on the P11D, attracts Class 1A National Insurance, and cannot be payrolled voluntarily.
What are mileage allowance payments and AMAP rates?
When an employee uses their own vehicle for business travel and you reimburse them per mile, the payments are compared against HMRC's Approved Mileage Allowance Payments (AMAP). For cars and vans the approved rate is 45p per business mile for the first 10,000 business miles in the tax year and 25p per mile after that; for motorcycles it is 24p per mile and for bicycles 20p per mile, with no 10,000-mile step. Payments up to the approved amount are tax-free and do not need to be reported. Anything above the approved amount is taxable and must be reported on the P11D, and if you pay below the approved amount the employee can claim tax relief on the shortfall. You can also pay a tax-free passenger rate of up to 5p per business mile for each fellow employee you carry on the same trip.
What are advisory fuel rates?
Advisory fuel rates are HMRC's recommended per-mile rates for reimbursing or recovering fuel costs for company cars, as distinct from AMAP rates which apply to an employee's own vehicle. They are used either to reimburse employees for business travel in a company car, or for employees to repay the cost of fuel used privately so as to avoid a fuel benefit charge. HMRC reviews advisory fuel rates quarterly, with changes taking effect on 1 March, 1 June, 1 September and 1 December, and publishes separate figures by engine size and fuel type, including an advisory electric rate for fully electric company cars. If the rate you pay is no higher than the published advisory fuel rate, there is no taxable profit and no Class 1A National Insurance to pay. Because the rates change four times a year, always check the current figures before applying them.
What is the trivial benefits exemption?
The trivial benefits exemption lets you provide small perks without tax, National Insurance or any reporting, provided all the conditions are met. A benefit is trivial if it cost you £50 or less to provide, it is not cash or a cash voucher, it is not a reward for the employee's work or performance, and it is not something they are entitled to under their contract. Typical examples are a small birthday gift or a seasonal treat. For directors of a close company (a limited company controlled by five or fewer shareholders) there is an annual cap of £300 on the total value of trivial benefits they can receive tax-free in a tax year. The exemption does not apply to benefits provided through a salary sacrifice arrangement.
What is a PAYE Settlement Agreement and Class 1B National Insurance?
A PAYE Settlement Agreement (PSA) lets you settle the tax and National Insurance on certain minor, irregular or impracticable-to-allocate benefits and expenses in a single annual payment, so the items do not need to go on individual P11Ds or on employees' tax codes. Typical PSA items are staff entertainment or small one-off perks that would be awkward to report per employee. Under a PSA you pay the tax due on a grossed-up basis, plus Class 1B National Insurance, the employer charge that applies specifically to items settled through a PSA. The deadline to apply for a PSA is 5 July following the first tax year it applies to, and any tax and National Insurance due must be paid by 22 October after the tax year (19 October if paying by post).
What is a P46(Car) and when do I use it?
The P46(Car) is used to tell HMRC about changes to company cars during the tax year, so an employee's tax code can be adjusted promptly rather than waiting for the year-end P11D. You report a change when a car is first made available, when a different car replaces an existing one, when a car stops being available, or when private fuel starts or stops being provided. For employers who payroll car benefits, this information is increasingly reported in real time through the Full Payment Submission rather than on a separate form, with an amendment indicator used to flag corrections to car data sent earlier. Whichever route you use, the aim is the same: keep HMRC informed of car changes during the year so tax stays accurate.
Where can I find the rates and further help?
The appropriate-percentage car tables, advisory fuel rates, AMAP rates and the year's benefit charges are all published on GOV.UK and updated regularly, so confirm the current figures before you file or pay. For the reporting forms, deadlines, Class 1A and payrolling rules, see the companion article "Benefits in kind, P11D and Class 1A National Insurance: the basics." Because individual circumstances differ, this article is general guidance for the 2026 to 2027 tax year and is not a substitute for professional advice.