Neil Westwood & Co.

 

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About This Guide
Income Tax
Capital Gains Tax
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Main Capital Allowances
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Vehicle Benefits
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Key Dates And Deadlines
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Some Useful Rates
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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 2006/07 using the following table:

CO2 in g/kmTaxable %CO2 in g/kmTaxable %CO2 in g/kmTaxable %
PetrolDieselPetrolDieselPetrolDiesel
Less than 14515%18%175 to 17922%25%210 to 21429%32%
145 to 14916%19%180 to 18423%26%215 to 21930%33%
150 to 15417%20%185 to 18924%27%220 to 22431%34%
155 to 15918%21%190 to 19425%28%225 to 22932%35%
160 to 16419%22%195 to 19926%29%230 to 23433%35%
165 to 16920%23%200 to 20427%30%235 to 23934%35%
170 to 17421%24%205 to 20928%31%240 and over35%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 capacityTaxable %
Up to 1400cc15%
1401 - 2000cc22%
Over 2000cc32%


Van Benefit


 Van under 4 years oldVan 4 years old, or over
Benefit per vehicle including fuel for private use £500£350


Company vans

From 6 April 2007 the taxable benefit for the unrestricted use of company vans will be £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.

The maximum tax payable on the use of a company van will therefore increase from April 2007 from £200 to £1,400 p.a., and the employer's Class1A NIC payable will increase from £64 to £448 p.a.

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 2006/07, is calculated by multiplying £14,400 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 182 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 2006/07 tax bill for the fuel is: £14,400 x 23% x 40% = £1,324.80.



 

Neil Westwood & Co.

101 Dixons Green Road, Dudley

West Midlands, DY2 7DJ