Chargeable on employees earning £8,500 or over (including benefits), and directors.
The taxable benefit is calculated as a percentage of the list price of the car, on the day before it was first registered, plus certain accessories. This percentage depends upon the rate at which the car emits carbon dioxide (CO2), and the fuel type.
For cars which cannot produce CO2 engine emissions under any circumstances when driven (‘zero emission cars’, including those powered solely by electricity), the appropriate percentage is reduced to 0%, thereby reducing the car benefit charge to nil.
For cars emitting between 1 and 75g/km the appropriate percentage is reduced to 5% (8% for diesel) for 5 years from 6 April 2010.
You can find the appropriate percentage for 2011/12 using the following table:
CO2 > Emissions (g/km)
|
Appropriate percentage
|
|
Petrol %
|
Diesel %
|
|
Up to 75
|
5
|
8
|
76-120
|
10
|
13
|
121-129
|
15
|
18
|
130-134
|
16
|
19
|
135-139
|
17
|
20
|
140-144
|
18
|
21
|
145-149
|
19
|
22
|
150-154
|
20
|
23
|
155-159
|
21
|
24
|
160-164
|
22
|
25
|
165-169
|
23
|
26
|
170-174
|
24
|
27
|
175-179
|
25
|
28
|
180-184
|
26
|
29
|
185-189
|
27
|
30
|
190-194
|
28
|
31
|
195-199
|
29
|
32
|
200-204
|
30
|
33
|
205-209
|
31
|
34
|
210-214
|
32
|
35
|
215-219
|
33
|
35
|
220-224
|
34
|
35
|
225 and above
|
35
|
35
|
How to find out how much CO2 your company car emits – see:
- the car’s V5 registration document
- your dealer
- the data pages of car magazines (current models)
- the Vehicle Certification Agency – www.vca.gov.uk
- the website of the Society of Motor Manufacturers and Traders – www.smmt.co.uk/
Reliable emissions data is not widely available for cars registered before 1 January 1998. For them, the following taxable percentages apply, regardless of fuel type:
Engine capacity |
Taxable %
|
Up to 1400cc |
15%
|
1401 – 2000cc |
22%
|
Over 2000cc |
32%
|
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.
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. Fuel-Only Mileage Rates
HMRC advisory mileage rates at the time of the Budget for employee private mileage reimbursement or employer reimbursement of business mileage in company cars are:
Petrol | Diesel | LPG | |
Up to 1400cc | 14p | 13p | 10p |
1401cc – 2000cc | 16p | 13p | 12p |
Over 2000cc | 23p | 16p | 17p |
Example: A company car driver has a car which, on the day before it was first registered, had a list price of £21,000. It runs on petrol, and emits 177 g/km of CO2.
If we assume the driver pays tax at 40%, the 2011/12 tax bill on the car is: £21,000 x 25% x 40% = £2,100
If the employer provides any fuel used for private journeys and is not reimbursed for the cost, the 2011/12 tax bill for the fuel is: £18,800 x 25% x 40% = £1,880.
The taxable benefit for the unrestricted use of company vans is £3,000 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 |
Tax (50% taxpayer) | £1,500 | £275 | £1,775 |
Employer’s class 1A NICs | £414 | £75.90 | £489.90 |
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.
The flat rate of £3,000 is reduced to nil for vans which cannot produce C02 engine emissions under any circumstances when driven. There is no fuel benefit for such vans.