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 2008/09 using the following table:

CO₂ in g/km	Taxable %		CO₂ in g/km	Taxable %		CO₂ in g/km	Taxable %
CO₂ in g/km	Petrol	Diesel	CO₂ in g/km	Petrol	Diesel	CO₂ in g/km	Petrol	Diesel
120 and below	10%	13%
121 to 139	15%	18%	170 to 174	22%	25%	205 to 209	29%	32%
140 to 144	16%	19%	175 to 179	23%	26%	210 to 214	30%	33%
145 to 149	17%	20%	180 to 184	24%	27%	215 to 219	31%	34%
150 to 154	18%	21%	185 to 189	25%	28%	220 to 224	32%	35%
155 to 159	19%	22%	190 to 194	26%	29%	225 to 229	33%	35%
160 to 164	20%	23%	195 to 199	27%	30%	230 to 234	34%	35%
165 to 169	21%	24%	200 to 204	28%	31%	235 and over	35%	35%

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 2008/09, is calculated by multiplying £16,900 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 23% x 40% = £1,656. If the employer provides any fuel used for private journeys and is not re-imbursed for the cost, the 2008/09 tax bill for the fuel is: £16,900 x 23% x 40% = £1,554.80.

Company vans

The taxable benefit for the unrestricted use of company vans is £3,000 (with no reduction for older vans) plus a further £500 of taxable benefit if fuel is provided by the employer for private travel.

Van and fuel charge	Van	Fuel	Total
Tax (20% taxpayer)	£600	£100	£700
Tax (40% taxpayer)	£1,200	£200	£1,400
Employer's class 1A NICs	£384	£64	£448

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.