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Let’s consider this: a car allowance isn’t your only option. Many employers offer company cars, which are taxed differently as Benefits-in-Kind (BIK). The BIK tax is based on the car’s list price, CO2 emissions, and your tax band. For 2025/26, BIK rates range from 3% for zero-emission electric cars to 37% for high-emission vehicles (over 170g/km CO2).