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Company Car Tax
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Where a director or an employee earning £8,500 a year or more is
provided with a car by their employer and that car is available
for private use , or to a member of their family or household, a
taxable benefit arises. A further tax charge arises if free or
subsidised fuel is provided for private use in a company car
(for fuel taxation click
here)
HOW TO
CALCULATE COMPANY CAR TAX - BASIC CALCULATION
The basic calculation of the annual tax payable is shown below
(see notes below):
Taxable list price of vehicle x CO2
emissions percentage x employee tax rate
Example for 2008/09
Ford Mondeo 2.0 TDCi Zetec, CO2
emissions 161 g/km, list price £17,800, 40% taxpayer
£17,800 x 23% (per table below)
x 40% = £1637.60 annual tax
payable
To see the rules that apply where employee contributions are
made, click
here.
Taxable list
price - meaning
The list price to be used in the calculation is the 'inclusive'
price as published by the manufacturer on the day before
registration of the vehicle. The 'inclusive' price includes
delivery, taxes and any accessories. Accessories added after
delivery are also included if they cost over £100. The maximum
taxable list price is £80,000.
CO2 emissions
percentage
The relevant CO2
emissions percentage is determined by the table below:
|
CO2
emissions of vehicle |
Tax
years 2008/09 and 2009/10 (see notes) |
2010/11 (see
notes) |
|
Less
than 135# |
15% |
15% |
|
135
to 139 |
15% |
16% |
|
140
to 144 |
16% |
17% |
|
145
to 149 |
17% |
18% |
|
150
to 154 |
18% |
19% |
|
155
to 159 |
19% |
20% |
|
160
to 164 |
20% |
21% |
|
165
to 169 |
21% |
22% |
|
170
to 174 |
22% |
23% |
|
175
to 179 |
23% |
24% |
|
180
to 184 |
24% |
25% |
|
185
to 189 |
25% |
26% |
|
190
to 194 |
26% |
27% |
|
195
to 199 |
27% |
28% |
|
200
to 204 |
28% |
29% |
|
205
to 209 |
29% |
30% |
|
210
to 214 |
30% |
31% |
|
215
to 219 |
31% |
32% |
|
220
to 224 |
32% |
33% |
|
225
to 229 |
33% |
34% |
|
230
to 234 |
34% |
35% |
|
235 or over |
35% |
35% |
Notes
Where the
car is a diesel car (except where that car was registered before
01/01/06 and is compliant with Euro IV emission standard), a
supplement of 3% applies, subject to the maximum of 35%.
From
2008/09, the following discounts apply to alternative fuel
vehicles:
|
Bi-fuel (not a conversion) |
2% |
|
Hybrid petrol-electric |
3% |
|
Electric only |
6% |
|
Bio-ethanol |
2% |
#From
2008/09, for cars emitting 120 g/km of CO2, the appropriate
percentage will be 10% (diesels will still be subject to the 3%
surcharge).
Employee tax
rate
This is the marginal tax rate of the individual, i.e. 20%
(from 06/04/08) or
40%.
Employee contributions
Where an employee makes a contribution towards the capital cost
of the vehicle, this will reduce the taxable list price, subject
to a maximum of £5,000.
Where an employee makes a contribution for private use of the
vehicle, this will reduce the amount of taxable benefit (i.e.
after multiplying the list price by the appropriate CO2
percentage.
Car
unavailable for part of the year
If a car is unavailable to an
employee for a continuous period of 30 days or more, the taxable
benefit is reduced by the proportion of the year for which the
car is unavailable.
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