COMPANY CAR TAX

This guide covers company cars running on petrol or diesel fuel, where the employee has private use of the car. For other scenarios including an on-line calculator see www.cartaxpro.com

Scale Charge

Company cars are taxed according to a percentage of the list price based on their carbon dioxide (CO2) emissions. The CO2 figure is the one applicable at the date of first registration and remains the same for the life of the car.

• 3% should be added for vehicles which run solely on diesel fuel (except where they meet the Euro IV emissions standard and were registered on or before 31/12/2005) but only up to the maximum of 35%.
• CO2 emissions should be rounded down to the nearest 5g/km.
• C02 Emissions can be looked up at www.vcacarfueldata.org.uk
• The car's list price is the published list price on the day before the date of registration, including VAT, delivery, number plates and any optional extras. The road fund licence and registration fee are excluded.
• The maximum list price of the vehicle for tax purposes is £80,000.
• If an employee contributes towards the cost of the car the list price is reduced by the value of the contribution up to a maximum of £5,000.
• If the list price of the car is above £80,000 including the employee's contribution then only the part (if any) of the employee's contribution that would take the car below £80,000 can be counted (e.g. £3,000 on an £82,000 car).

The benefit in kind is the list price of the vehicle multiplied by the percentage in the table above.

Contributions for Private Use

If the employee is required to make contributions to the private use of the car then these payments are used to reduce the taxable benefit of the vehicle (to a minimum of zero).

The contributions must be only to pay for private use to qualify.

Car Available for Only Part of the Year

If the company car is unavailable to the employee for a continuous period of 30 days or more, the benefit in kind can be reduced proportionally according to the total number of days in the period as a percentage of a 365 day year.

This does not apply if the car is available but the employee is unable to drive it or if a replacement car of similar quality is made available within the initial 30 day period.

Fuel Benefit

Fuel benefit applies where the employee receives free fuel for private use of the vehicle.

Fuel benefit is calculated by taking the nominal value of fuel for the year from the table above and multiplying it by the same percentage used to calculate the scale charge.

If free private fuel is provided for only part of the year then a further daily pro-rata calculation can be applied.