The benefit in kind formula, term by term
The benefit in kind on a company car is always calculated the same way: start from the catalogue value of the vehicle, apply a reduction linked to its age, multiply by six sevenths, then by a percentage based on CO2 emissions. The result is a yearly amount, which the employer spreads across the monthly payslips.
Three of the four terms are fixed from first registration: the catalogue value, the engine type and the emissions. Only the age reduction and the CO2 percentage move, the first because the car gets older, the second because the reference emission is set again every year.
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Catalogue value: the list price of the vehicle when new, options and VAT included, with no discount of any kind.
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Age reduction: 6 % for each year started since first registration, with a floor at 70 % of the catalogue value.
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The 6/7 coefficient: it applies as is, to every vehicle.
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CO2 percentage: 5.5 % at the reference emission, plus or minus 0.1 point per gram of difference, with a minimum of 4 % and a maximum of 18 %.
An indexed annual minimum applies when the calculation comes out lower. Ask your payroll office which amount is in force for the income year concerned.
Catalogue value and the 6 % reduction per year
The catalogue value is the number one source of mistakes. It is not the price you paid, and it is not the lease amount: it is the list price of the vehicle when new, options and VAT included, before any discount. Two identical cars therefore produce the same benefit, whether or not one of them was negotiated 15 % down.
From the second year onwards, the catalogue value falls by 6 % for each year started since first registration. That reduction stops at 70 %: after the sixth year, the benefit no longer goes down.
Catalogue value reduction based on the age of the vehicle
| Period since first registration |
Share of the catalogue value |
What to remember |
| 0 to 12 months |
100 % |
The full catalogue value applies |
| 13 to 24 months |
94 % |
First reduction, as soon as the year starts |
| 25 to 36 months |
88 % |
The reduction follows months, not calendar years |
| 37 to 48 months |
82 % |
A standard lease contract ends around here |
| 49 to 60 months |
76 % |
Last step before the floor |
| Over 60 months |
70 % |
Legal floor, the benefit stops falling |
A year started counts as a full year. A car first registered in November therefore drops to the 94 % coefficient the following November, not after twelve complete calendar months.
The CO2 coefficient and the reference emission
The CO2 percentage starts at 5.5 % for a car emitting exactly the reference emission for the year. Every gram above adds 0.1 point, every gram below removes 0.1, within a range running from 4 % to 18 %.
The FPS Finance publishes the reference emission at the start of each income year, with one value for petrol and one for diesel. Since it falls almost every year, the same vehicle sees its benefit rise year after year, even as its catalogue value goes down.
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Petrol, LPG, natural gas and plug-in hybrid: use the petrol reference emission.
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Diesel: use the diesel reference emission, which is lower than the petrol one.
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Vehicle with no known CO2 figure: the tax authority applies a flat 205 g/km for petrol and 195 g/km for diesel.
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The resulting percentage never falls below 4 % and never exceeds 18 %, even for a very large engine.
Reference emissions published in recent years
| Income year |
Petrol reference |
Diesel reference |
| 2023 |
82 g/km |
67 g/km |
| 2024 |
78 g/km |
65 g/km |
| 2025 |
71 g/km |
59 g/km |
| 2026 |
Published in the Official Gazette early in the year |
Enter it in the calculator |
Enter the reference emission published for the income year you want to work out. It is the only parameter that changes every year, and it is the one that moves the result.
Why an electric car stays at the 4 % floor
A fully electric car emits nothing at the tailpipe. The formula therefore returns a negative percentage, which is brought back to the legal floor of 4 %. That is the absolute minimum, and it stays there as long as the rule remains in place.
For the same catalogue value, the gap with a combustion car is wide: the percentage often triples. That is why a director pays far less tax on an electric car, even though the vehicle costs more to buy.
The 4 % floor applies to the full catalogue value, options included. On a well equipped electric car the benefit is therefore far from symbolic: run the numbers before choosing the trim level.
What the benefit costs the company
The benefit in kind is taxed on the driver, but it also has a cost on the company side. Part of the benefit comes back as a disallowed expense, and the CO2 solidarity contribution remains payable to the social security office every month, including for an electric car.
The disallowed expense is 17 % of the benefit, or 40 % when the company pays for fuel or charging used on private journeys. That percentage is calculated on the gross benefit, before any personal contribution from the driver.
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Disallowed expense of 17 % of the annual benefit, reported in the corporate tax return.
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Disallowed expense raised to 40 % if the company pays for fuel or charging on private journeys.
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Monthly CO2 solidarity contribution to the social security office, based on emissions and indexed every year, with a minimum amount.
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Personal contribution from the driver: it reduces the taxable benefit, but not the base of the disallowed expense.
The cost of the benefit on the company side
| Item |
Calculation base |
Amount |
| Disallowed expense |
Annual benefit in kind |
17 % |
| Increased disallowed expense |
Annual benefit, if the company pays for fuel or private charging |
40 % |
| CO2 solidarity contribution |
Emissions and engine type, formula indexed every year |
Monthly, with a minimum |
| Personal contribution |
Withheld from pay or invoiced to the driver |
Reduces the taxable benefit |
Always compare the full cost over the term of the contract: lease payments, solidarity contribution, disallowed expense and the driver's own tax. A car that looks cheaper at signature is not always cheaper at the end.
Where the benefit shows up and when it is taxed
The benefit appears on the payslip of the employee or the director month after month, and again on the annual tax form. It is added to taxable professional income and is subject to withholding tax like the rest of the pay.
If the driver pays a personal contribution for private use, that amount is deducted from the taxable benefit and can cancel it out entirely. The contribution has to be genuinely withheld or invoiced, and traceable in the accounts.
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Employee: the benefit goes through the payroll office and follows the monthly payslip.
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Company director: the same logic, with the personal contribution often booked through the current account.
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Self-employed person trading in their own name: there is no benefit in kind, but a split between business and private use of the vehicle.
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A logbook or a record of journeys remains the best document to produce during an audit.
A self-employed person trading in their own name never calculates a benefit in kind for themselves. They deduct the business share of their car expenses, as explained in our guide to the tax deduction on an electric car.
Tracking the vehicle and its costs in your accounts
The benefit in kind is calculated once a year, but the vehicle generates paperwork all year round: leasing, insurance, servicing, charging, road tax. Once those expenses sit in a dedicated cost account, the calculation and the supporting evidence take minutes.
In Novadesko, every invoice tied to the vehicle is recorded with its recoverable VAT share and its receipt attached. Your accountant finds the complete file at return time, with the catalogue value and the first registration date close at hand.
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A dedicated cost account for the vehicle, with the order form and the registration document in the same folder.
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Charging receipts photographed from your phone and attached to the expense.
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A cash flow view showing what the car really costs each month.
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An export to your accounting firm, line by line, with no re-keying.
Keep the technical sheet of the vehicle with its original catalogue value on it. That is the document you always look for at the wrong moment, and it fixes the benefit for the whole term of the contract.
Frequently asked questions
How is the benefit in kind on a company car calculated?
Multiply the catalogue value by the reduction percentage tied to the age of the vehicle, then by six sevenths, then by the CO2 percentage. That percentage is 5.5 % at the reference emission for the year, with 0.1 point more or less per gram of difference, within a range of 4 % to 18 %.
Which catalogue value should be used?
The list price of the vehicle when new, options and VAT included, with no discount. The price actually paid, the lease amount or the value of a second hand vehicle play no part in the calculation.
Does the benefit fall as the car gets older?
Yes, the catalogue value is reduced by 6 % for each year started since first registration, with a floor at 70 %. That drop is often offset by the reference emission, which falls every year and pushes the CO2 percentage back up.
What is the benefit in kind on an electric company car?
A fully electric car is taxed at the floor percentage of 4 %, since its emissions are nil. The benefit therefore stays proportional to the catalogue value, options included, but is clearly lower than on a comparable combustion car.
Does a self-employed person trading in their own name calculate a benefit in kind?
No. The benefit in kind applies to employees and company directors to whom a company makes a vehicle available. A self-employed person trading in their own name splits car expenses between business and private use, then applies the deduction percentage of the vehicle.
Does a personal contribution reduce the taxable benefit?
Yes. The amount the driver actually pays for private use is deducted from the taxable benefit and can cancel it out. The contribution has to be withheld from pay or invoiced, and it must stay traceable in the accounts.
What does the benefit cost the company?
The company reports 17 % of the benefit as a disallowed expense, or 40 % if it pays for fuel or charging used on private journeys. On top of that comes the monthly CO2 solidarity contribution to the social security office, including for an electric car.
Read next
This guide is for information only. Thresholds and amounts are indexed every year, so check them with the FPS Finance or with your accountant before you act on them.
