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Company cars

Company cars

The company car continues to be an important part of the remuneration package for many employees despite the increases in the taxable benefit rates over the last few years.

Employees and directors pay tax on the provision of the car and on the provision of fuel by employers for private mileage. Employers also pay Class 1A NICs at 12.8% on the same amount. This NIC charge is payable by the 19 July following the end of the tax year.

The amount on which tax and Class 1A NICs is paid in respect of a company car depends on a number of factors. Essentially, the amount charged is calculated by multiplying the list price of the car, including most accessories, by a percentage. The percentage is set by reference to the rate at which the car emits carbon dioxide, according to officially determined rates.

2009/10 taxable benefits table

CO2 in g/km* Taxable % CO2 in g/km* Taxable %
Petrol Diesel Petrol Diesel
Less than 121 10% 13% 185 to 189 25% 28%
121 to 139 15% 18% 190 to 194 26% 29%
140 to 144 16% 19% 195 to 199 27% 30%
145 to 149 17% 20% 200 to 204 28% 31%
150 to 154 18% 21% 205 to 209 29% 32%
155 to 159 19% 22% 210 to 214 30% 33%
160 to 164 20% 23% 215 to 219 31% 34%
165 to 169 21% 24% 220 to 224 32% 35%
170 to 174 22% 25% 225 to 229 33% 35%
175 to 179 23% 26% 230 to 234 34% 35%
180 to 184 24% 27% 235 and over 35% 35%
* The exact CO2 figure is rounded down to the nearest 5g/km

The discounts for lower emissions vehicles are:

  • 2% for bi-fuel lpg and petrol cars manufactured or converted before type approval
  • 2% for cars able to run on E85 fuel (type G cars)
  • 3% for hybrid electric and petrol cars
  • 6% for electric-only cars.

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Car fuel benefit

The multiplier for car fuel benefit has increased to £16,900.

Car and fuel benefit calculation

The amount chargeable to income tax (user) and Class 1A national insurance contributions (employer) for 2008/09 is calculated by multiplying list price (car benefit) or the fuel multiplier (fuel benefit) by a percentage based on the rate at which the car emits carbon dioxide (CO2 in g/km) (see table above).

Take a car with a list price of £18,000 when it was first registered (say 31 March 2008) and which emits carbon dioxide at a rate of 176 g/km.

Car benefit Petrol Diesel
List price £18,000 £18,000
Taxable percentage 23% 26%
Taxable benefit £4,140 £4,680
Tax (20% taxpayer) £828 £936
Tax (40% taxpayer) £1,656 £1,872
Employer’s Class 1A NIC £530 £599

 

Fuel benefit Petrol Diesel
Multiplier £16,900 £16,900
Taxable percentage 23% 26%
Taxable benefit £3,887 £4,394
Tax (20% taxpayer) £777.40 £878.80
Tax (40% taxpayer) £1,554.80 £1,757.60
Employer’s Class 1A NIC £497.54 £562.43

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VAT fuel scale charges

Fuel scale charges for VAT for use from 1 May 2009

VAT fuel scale charges for 1 month period

CO2 band g/km VAT fuel scale charge
1 month period
120 or less 42.00
125 63.00
130 63.00
135 63.00
140 67.00
145 71.00
150 75.00
155 79.00
160 83.00
165 88.00
170 92.00
175 96.00
180 100.00
185 104.00
190 109.00
195 113.00
200 117.00
205 121.00
210 126.00
215 130.00
220 134.00
225 138.00
230 142.00
235 or more 147.00

VAT fuel scale charges for 3 month periods

CO2 band VAT fuel scale charge
3 month period
£
120 or less 126.00
125 189.00
130 189.00
135 189.00
140 201.00
145 214.00
150 226.00
155 239.00
160 251.00
165 264.00
170 276.00
175 289.00
180 302.00
185 314.00
190 327.00
195 339.00
200 352.00
205 365.00
210 378.00
215 390.00
220 403.00
225 416.00
230 428.00
235 or more 441.00

VAT fuel scale charges for 12 month periods

CO2 band VAT fuel scale charge
12 month period
£
120 or less 505.00
125 755.00
130 755.00
135 755.00
140 805.00
145 855.00
150 905.00
155 960.00
160 1,010.00
165 1,060.00
170 1,110.00
175 1,160.00
180 1,210.00
185 1,260.00
190 1,310.00
195 1,360.00
200 1,410.00
205 1,465.00
210 1,515.00
215 1,565.00
220 1,615.00
225 1,665.00
230 1,715.00
235 or more 1,765.00

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