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Company CarsCar benefitThe threshold CO2 emissions rate has been frozen at 140 g/km until 5 April 2008. The threshold for 2008/09 will be 135g/km. The rate of the taxable benefit ranges from 15% to 35% of list price (plus certain accessories) for most petrol or diesel-powered cars. You can find your taxable percentage of the list price for 2006/07 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 | | Less than 145 | 15% | 18% | 175 to 179 | 22% | 25% | 210 to 214 | 29% | 32% | | 145 to 149 | 16% | 19% | 180 to 184 | 23% | 26% | 215 to 219 | 30% | 33% | | 150 to 154 | 17% | 20% | 185 to 189 | 24% | 27% | 220 to 224 | 31% | 34% | | 155 to 159 | 18% | 21% | 190 to 194 | 25% | 28% | 225 to 229 | 32% | 35% | | 160 to 164 | 19% | 22% | 195 to 199 | 26% | 29% | 230 to 234 | 33% | 35% | | 165 to 169 | 20% | 23% | 200 to 204 | 27% | 30% | 235 to 239 | 34% | 35% | | 170 to 174 | 21% | 24% | 205 to 209 | 28% | 31% | 240 and over | 35% | 35% |
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Diesel cars are generally subject to a 3% surcharge - with some exceptions, the taxable benefit for a diesel car is 3% higher than for a petrol car with identical CO2 emissions. The 3% surcharge was waived for cars which complied with Euro IV emissions standards, and this applies to 5 April 2006. Thereafter, the waiver applies only to Euro IV compliant cars first registered no later than 31 December 2005. The discounts for lower emissions vehicles are simplified from 6 April 2006, at: - 2% for bi-fuel lpg and petrol cars manufactured or converted before type approval
- 3% for hybrid electric and petrol cars
- 6% for electric-only cars. It is also worth noting that while the costs of converting to bi-fuel lpg and petrol after type approval are excluded from the calculation of car benefit, there is no discount for such cars, after 5 April 2006. In addition, with effect from 2008/09, there will be a reduced taxable percentage rate of 10% for those cars with CO2 emissions of 120 g/km or less. Car fuel benefit The multiplier for car fuel benefit has not changed since the current scheme was introduced. It stands at £14,400. Car and fuel benefit calculationThe amount chargeable to income tax (user) and Class 1A national insurance contributions (employer) for 2006/07 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 2006) and which emits carbon dioxide at a rate of 180 g/km. | Car Benefit | Petrol | Diesel | | List price | £18,000 | £18,000 | | Taxable percentage | 23% | 26% | | Taxable benefit | £4,140 | £4,680 | | Tax (22% taxpayer) | £911 | £1,030 | | Tax (40% taxpayer) | £1,656 | £1,872 | | Employer’s Class 1A NIC | £530 | £599 | | Fuel benefit | Petrol | Diesel | | Multiplier | £14,400 | £14,400 | | Taxable percentage | 23% | 26% | | Taxable benefit | £3,312 | £3,744 | | Tax (22% taxpayer) | £729 | £824 | | Tax (40% taxpayer) | £1,325 | £1,498 | | Employer’s Class 1A NIC | £424 | £479 |
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Company vansWith a fundamental change due in 2007, no changes were announced for 2006/07. Currently, company van users whose private travel is permitted to go beyond home to work are taxed on £500 benefit (£350 if the van is more than four years old), covering the use of the van and fuel. From April 2007, such users will be taxable on £3,000 for the use of the van, plus a further £500 if the employer provides fuel. | Van and fuel charge | 2006/07 | 2007/08
(inc. fuel) | | Van more than four years old | | | | Tax (22% taxpayer) | £77 | £770 | | Tax (40% taxpayer) | £140 | £1,400 | | Employer’s class 1A NICs | £44.80 | £448 | | Van less than four years old | | | | Tax (22% taxpayer) | £110 | £770 | | Tax (40% taxpayer) | £200 | £1,400 | | Employer’s class 1A NICs | £64 | £448 |
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VAT on scale charge for quarters commencing on or after 1 May 2006| Engine size | Petrol | Diesel | | Up to 1400cc | £40.66 | £38.72 | | 1401 – 2000cc | £51.53 | £38.72 | | Over 2000cc | £75.66 | £49.30 |
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Mileage ratesChanges to the HM Revenue & Customs business mileage rates are announced from time to time.
The current rates are as follows: | Vehicle | First 10,000 miles | Thereafter | | Car / Van | 40p | 25p | | Motorcycle | 24p | 24p | | Bicycle | 20p | 20p |
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| Car - fuel only advisory rates | | Engine Capacity | Petrol | Diesel | Gas | | Up to 1400cc | 10p | 9p | 7p | | 1401 - 2000cc | 12p | 9p | 8p | | Over 2000cc | 16p | 13p | 10p |
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The HM Revenue & Customs advisory rates can be applied as a tax-free maximum rate for employees claiming for petrol used on business journeys and for employees reimbursing their employers with the cost of petrol used for private journeys. HM Revenue & Customs will consider claims for a higher maximum rate, if it can be demonstrated that it is necessary for an employee to use a car with higher than average fuel costs.
Car costs – VED rates| Band | CO2 emissions g/km | Petrol | Diesel | | A | 100 and below | £0 | £0 | | B | 101 - 120 | £40 | £50 | | C | 121 - 150 | £100 | £110 | | D | 151 - 165 | £125 | £135 | | E | 166 - 185 | £150 | £160 | | F | 186 - 225 | £190 | £195 | | G* | 226 and above | £210 | £215 |
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* Cars registered from 23 March 2006 | |
