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Vehicle Benefits

Chargeable on employees earning £8,500 or over (including benefits), and directors.

Car Benefit

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.

From April 2015, the five year exemption for zero carbon and the lower rate for ultra-low carbon emission cars came to an end. Two new bands were introduced for ultra-low emission vehicles (ULEVs). These were set at 0-50 g/km and 51-75 g/km. The appropriate percentages for the remaining bands have increased by 2% for cars emitting more than 75 g/km, to a new maximum of 37%.

You can find the appropriate percentage for 2015/16 using the following table:

CO2 emissions

(g/km)

Appropriate percentage

Petrol %

Diesel %

0-50

5

8

51-75

9

12

76-94

13

16

95-99

14

17

100-104

15

18

105-109

16

19

110-114

17

20

115-119

18

21

120-124

19

22

125-129

20

23

130-134

21

24

135-139

22

25

140-144

23

26

145-149

24

27

150-154

25

28

155-159

26

29

160-164

27

30

165-169

28

31

170-174

29

32

175-179

30

33

180-184

31

34

185-189

32

35

190-194

33

36

195-199

34

 

 

 

37

200-204

35

205-209

36

210 or more

37

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)

 

 

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 benefit

The taxable car fuel benefit, for 2015/16, is calculated by applying the CO2 based car benefit percentage to the car fuel benefit charge multiplier of £22,100.

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 for employee private mileage reimbursement or employer reimbursement of business mileage in company cars are:

Engine Size

Petrol

LPG

1400cc or less

12p

8p

1401cc - 2000cc

14p

9p

Over 2000cc

21p

14p

Engine Size

Diesel

1600cc or less

10p

1601cc - 2000cc

12p

Over 2000cc

14p

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 2015/16 tax bill on the car is: £21,000 x 30% x 40% = £2,520

If the employer provides any fuel used for private journeys and is not reimbursed for the cost, the 2015/16 tax bill for the fuel is: £22,100 x 30% x 40% = £2,652.

Company vans

The taxable benefit for the unrestricted use of company vans is £3,150 plus a further £594 of taxable benefit if fuel is provided by the employer for private travel.

Van and fuel charge

Van

Fuel

Total

Tax (20% taxpayer)

£630

£118.80

£748.80

Tax (40% taxpayer)

£1,260

£237.60

£1,497.60

Tax (45% taxpayer)

£1,417.50

£267.30

£1,684.80

Employer's class 1A NICs

£434.70

£81.97

£516.67

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 £3,150 is reduced by 80% to £630 for vans which cannot produce C02 engine emissions under any circumstances when driven. There is no fuel benefit for such vans.