Benefit in Kind (BIK) tax is predicated on the CO2 emissions of a vehicle. The BIK rate is multiplied by the P11D price of the car to derive the value of the annual taxable benefit. The rate of income tax paid by the driver is then applied to this amount to give the annual BIK charge.
Example: BIK tax liability in 2015/16
A BMW 116d EfficientDynamics Plus 5dr has a P11D price of £22,505 and CO2 emissions of 89g/km, putting it in the 16% BIK band in 2015/16. £22,505 x 16% gives a taxable value of £3,600, equating to yearly BIK tax of £720 (£60 a month) for a 20% tax payer, or £1,440 a year (£120 a month) for a 40% tax payer.
Example figures correct as of June 2015.