COMPANY CARS
Introduction
Vehicle benefits are chargeable on employees earning £8,500 or over (including benefits), and directors. The tax payable on a company car is governed by four factors:
1) the list price of the car, on the day before it was first registered, plus certain accessories,
2) the rate at which the car emits carbon dioxide (CO2),
3) the fuel type
4) your highest rate of income tax.
Rates
You can find your taxable percentage for 2011/12 using the following table:
CO2 in g/km | Taxable % | CO2 in g/km | Taxable % | CO2 in g/km | Taxable % | |||
| Petrol | Diesel | Petrol | Diesel | Petrol | Diesel | |||
| 76 to 120 | 10% | 13% | 160 to 164 | 22% | 25% | 200 to 204 | 30% | 33% |
| 121 to 129 | 15% | 18% | 165 to 169 | 23% | 26% | 205 to 209 | 31% | 34% |
| 130 to 134 | 16% | 19% | 170 to 174 | 24% | 27% | 210 to 214 | 32% | 35% |
| 135 to 139 | 17% | 20% | 175 to 179 | 25% | 28% | 215 to 219 | 33% | 35% |
| 140 to 144 | 18% | 21% | 180 to 184 | 26% | 29% | 220 to 224 | 34% | 35% |
| 145 to 149 | 19% | 22% | 185 to 189 | 27% | 30% | above 225 | 35% | 35% |
| 150 to 154 | 20% | 23% | 190 to 194 | 28% | 31% | |||
| 155 to 159 | 21% | 24% | 195 to 199 | 29% | 32% | |||
Cars with £NIL CO2 emmissions attract no benefits. Vehicles with CO2 emmissions between 1 and 75 attract a BIK rate of 5%.
To find out how much CO2 your company car emits you can refer to a number of sources including the car's V5 registration document or your dealer. Reliable emissions data is not widely available for cars registered before 1 January 1998. For them the following percentages apply, regardless of fuel type.
| Engine capacity | Taxable % |
| Up to 1400cc | 15% |
| 1401 - 2000cc | 22% |
| Over 2000cc | 32% |
Car fuel benefits
If the employee pays for the full cost of all fuel for private journeys (usually including home to work) there will be no car fuel benefit. In all other cases the full tax charge will be due. The taxable car fuel benefit, for 2011/12, is calculated by multiplying £18,800 by the same percentage as applies (or would apply) for the car benefit.
An Example
A company car driver has a car which, on the day before it was first registered, had a list price of £18,000. It runs on petrol, and emits 177 g/km of CO2. If we assume the driver pays tax at 40%, the annual tax bill on the car is: £18,000 x 25% x 40% = £1,800. If the employer provides any fuel used for private journeys and is not re-imbursed for the cost, the 2011/12 tax bill for the fuel is: £18,800 x 25% x 40% = £1,880.
Company vans
The taxable benefit for the unrestricted use of company vans is £3,000 (with no reduction for older vans) plus a further £550 of taxable benefit if fuel is provided by the employer for private travel.
| Van and fuel charge | Van | Fuel | Total |
| Tax (20% taxpayer) | £600 | £110 | £710 |
| Tax (40% taxpayer) | £1,200 | £220 | £1,420 |
| Employer's class 1A NICs | £414 | £76 | £490 |
Van drivers can avoid a benefit charge if they agree not to use the van for personal journeys. Driving to and from work is acceptable so long as there is a reasonable amount of business use.
Further help
If you need advice about how the company car rules affect you or how to plan for take best advantage of them please contact us by telephone on 01299 879140. 
