Vehicle Benefits
Chargeable on employees earning £8,500 or over (including benefits), and directors.
Car Benefit
The tax you pay on your company car is governed by four factors:
- the list price of the car, on the day before it was first registered, plus certain accessories,
- the rate at which the car emits carbon dioxide (CO2),
- the fuel type
(for most types of car, this is all the information you need to work out the taxable benefit) - your highest rate of income tax.
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 % | |||
| Petrol | Diesel | Petrol | Diesel | 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% |
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/co2/co2search.cfm
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% |
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.
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.
