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)

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.



Tax Data

Introduction
Income Tax
Capital Gains Tax
Corporation Tax
Capital Allowances
Value Added Tax
Inheritance Tax
Vehicle Benefits
Mileage Allowances
NI Contributions
Key Dates & Deadlines
Pension Premiums
Charitable Giving
Savings & Investments
Some Useful Rates
Stamp Taxes

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