How is road tax calculated in India?

Road tax in India is calculated based on the vehicle's ex-showroom price, engine capacity, and state-specific rates. Most states charge road tax as a percentage of the vehicle value (typically 2-10%) or at fixed rates based on vehicle category. Some states offer concessions for electric vehicles and hybrid cars. Road tax is a one-time payment for private vehicles in most states.

Is road tax the same across all states in India?

No, road tax varies significantly across Indian states. Each state has its own road tax structure with different rates and calculation methods. For example, Karnataka charges 2% for cars while Maharashtra charges up to 8%. Some states like Delhi have lower road tax rates. Always check your state's specific road tax rates before purchasing a vehicle.

How to pay road tax online?

Road tax can be paid online through the Parivahan portal, state transport department websites, or VAHAN portal. Select 'Tax Payment' service, enter vehicle registration number, calculate applicable tax, make online payment, and download the receipt. For interstate purchases, road tax is paid at the time of registration in the new state.

What happens if road tax is not paid?

Failure to pay road tax can result in penalties, vehicle seizure, and fines during traffic checks. Road tax default may also affect vehicle insurance validity and renewal. Some states impose ongoing annual tax for commercial vehicles. Always carry proof of road tax payment while driving.

Can road tax be claimed back when selling a vehicle?

In most Indian states, road tax is non-refundable upon vehicle sale. The tax is considered paid for the remaining validity period but cannot be claimed back. Some states allow refund of unused road tax period when transferring registration to another state. Check with your state's transport department for refund policies.

Company Car Tax UK 2026: BIK Rates and P11D Values Explained

Company cars remain one of the most tax-efficient ways to drive a desirable vehicle in the UK, but the rules around company car tax — officially called Benefit in Kind (BiK) tax — are complex and change regularly. In 2026, this guide covers everything employees and employers need to know about company car tax.

What Is Benefit in Kind Tax?

When you are provided with a company car — rather than a car allowance or cash — the car is considered a benefit provided by your employer. HMRC taxes this benefit as a Benefit in Kind, which is added to your annual income for income tax purposes. The amount of BiK tax you pay depends on:

The car's list price (the P11D value)
The car's CO2 emissions
Your marginal income tax rate

Understanding P11D Values

The P11D value is the list price of the car including VAT and delivery charges, but excluding the first registration fee and road tax. It does not reflect the actual price your employer paid for the car — it is a notional value used for tax calculation. Options and accessories are included in the P11D value at their full list price.

For a BMW 320d M Sport with a list price of GBP 45,000 and options totalling GBP 5,000, the P11D value is GBP 50,000. This GBP 50,000 figure is used to calculate the annual BiK tax charge. Related: Big Car Tax Changes Coming to UK 2026 | Car Tax Changes UK 2026 | Tax My Car UK 2026 | Adaptive Cruise Control UK 2026.

BiK Rates for 2026

HMRC sets BiK rates based on the car's CO2 emissions. The lower the emissions, the lower the BiK rate. For 2026:

Electric vehicles (0g/km): 2 percent BiK rate
Plug-in hybrids under 50g/km: 2 percent BiK rate
Plug-in hybrids 50-75g/km: 5 percent BiK rate
Petrol/diesel hybrids over 75g/km: 12-19 percent depending on exact CO2
Standard petrol/diesel cars: 19-37 percent BiK rate

These rates are set by HMRC and typically increase by 1 percentage point per year for most vehicles, but the government has committed to keeping the electric vehicle rate at 2 percent through to 2028.

How to Calculate Company Car Tax

The annual BiK tax charge is calculated as follows:

Step 1: P11D value multiplied by the BiK rate = the BiK value

Step 2: BiK value multiplied by your marginal income tax rate = annual BiK tax

Example: BMW 320d M Sport with P11D of GBP 50,000 and CO2 of 135g/km

BiK rate for 135g/km petrol car: 25 percent
BiK value: GBP 50,000 x 25% = GBP 12,500
Basic rate taxpayer (20%): GBP 12,500 x 20% = GBP 2,500 per year
Higher rate taxpayer (40%): GBP 12,500 x 40% = GBP 5,000 per year
Additional rate taxpayer (45%): GBP 12,500 x 45% = GBP 5,625 per year

Same Car — Electric vs Petrol Comparison

Consider the same BMW model — now available as a fully electric i3:

i3 with P11D of GBP 40,000 and 0g/km CO2: BiK rate 2 percent
BiK value: GBP 40,000 x 2% = GBP 800
Basic rate taxpayer: GBP 800 x 20% = GBP 160 per year
Higher rate taxpayer: GBP 800 x 40% = GBP 320 per year
Additional rate taxpayer: GBP 800 x 45% = GBP 360 per year

The annual tax saving from choosing an electric company car over the equivalent petrol model is GBP 2,340 for a higher rate taxpayer — or GBP 14,040 over a typical 3-year company car cycle.

Salary Sacrifice and the HMRC Advisory Fuel Rates

Many company car schemes operate through salary sacrifice, where the employee sacrifices part of their salary in exchange for the company car. The HMRC scheme allows employers to set sacrifice amounts that benefit from National Insurance savings. Always seek advice from a tax specialist when setting up salary sacrifice arrangements.

Advisory Fuel Rates for Company Cars

If your company car scheme allows you to use the car for private mileage, your employer may reimburse you at HMRC's Advisory Fuel Rates. These rates — updated quarterly — reflect the actual fuel cost per mile for different engine types and fuel sizes. In 2026, rates are approximately:

Petrol (1,400cc and under): 13p per mile
Petrol (over 1,400cc): 16p per mile
Diesel (1,600cc and under): 13p per mile
Diesel (over 1,600cc): 16p per mile
Electric: 9p per mile (based on the electricity cost equivalent)

Zero-Emission Mileage Supplement

From April 2025, drivers of zero-emission company cars who receive a mileage reimbursement from their employer can receive 4p per mile from the employer tax-free, in addition to the 9p per mile Advisory Electric Vehicle Rate. This provides a combined reimbursement of 13p per mile — the same as petrol — making employer-reimbursed EV mileage more financially neutral.

Employer Responsibilities

Employers are responsible for:

Calculating the P11D value for each company car
Reporting the benefit to HMRC via P11D forms
Paying Class 1A National Insurance on the BiK value
Operating PAYE on BiK tax through payroll
Updating HMRC when the car changes or the BiK rate changes

Official Resources: GOV.UK Check Vehicle Tax | GOV.UK Vehicle Tax | DVLA Online | MOT Check

Frequently Asked Questions

Q: How much is car tax (VED) in the UK 2026?
Car tax rates in the UK depend on your vehicle's CO2 emissions and list price. Standard rates start from £190 per year for petrol and diesel cars, with zero-rated VED for EVs. First-year rates vary from £0 to £2,605 depending on emissions. Additional premiums apply for vehicles over £40,000.

Q: How do I check if my car is taxed online?
You can check your vehicle's tax status for free on the Gov.uk website at gov.uk/check-vehicle-tax. You'll need your vehicle's registration number (number plate). You can also check via the Motor Insurance Database to verify road tax and insurance status simultaneously.

Q: Can I get a refund on car tax if I sell my vehicle?
Yes — if you sell or scrap your vehicle, you can claim a refund on any full months of remaining road tax. Contact DVLA with the V11 reminder letter or apply online at gov.uk. Refunds are usually processed within 4-6 weeks.

Q: Is road tax refund available when transferring ownership?
No — road tax does not transfer with the vehicle. When you sell your car, the tax is automatically cancelled and any remaining months are refunded to you by DVLA. The new owner must tax the vehicle immediately. As a buyer, always verify the vehicle's tax status before purchasing.

Q: What is the luxury car tax threshold in the UK 2026?
The additional rate for vehicles over £40,000 (list price) adds £410 per year to standard VED rates for years 2-6 of registration. This surcharge brings the annual cost for high-emission vehicles over £40,000 to around £600-690 per year. Pure EVs under £40,000 pay zero VED.