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 2010, (or 22 July if paid electronically).

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.

2010/11 taxable benefits table

CO2 in g/km* Taxable % CO2 in g/km* Taxable %
Petrol Diesel Petrol Diesel
1 to 75 5% 8% 180 to 184 25% 28%
76 to 120 10% 13% 185 to 189 26% 29%
121 to 134 15% 18% 190 to 194 27% 30%
135 to 139 16% 19% 195 to 199 28% 31%
140 to 144 17% 20% 200 to 204 29% 32%
145 to 149 18% 21% 205 to 209 30% 33%
150 to 154 19% 22% 210 to 214 31% 34%
155 to 159 20% 23% 215 to 219 32% 35%
160 to 164 21% 24% 220 to 224 33% 35%
165 to 169 22% 25% 225 to 229 34% 35%
170 to 174 23% 26% 230 and over 35% 35%
175 to 179 24% 27%    

* 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

Taxable benefit charges on zero-emission vehicles and low emission cars

Legislation in Finance Bill 2010 will introduce a relief from the chargeable benefit where the car or van concerned cannot produce CO2 engine emissions under any circumstances when driven.

The legislation will also introduce a reduction to the chargeable benefit where a car has an approved CO2 engine emission figure of between 1 and 75g per kilometre. Company cars within this threshold will be subject to tax of 5 per cent of their list price and the measure will have effect from 6 April 2010 to 5 April 2015.

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Car fuel benefit

The multiplier for car fuel benefit has increased to £18,000.

Car and fuel benefit calculation

The amount chargeable to income tax (user) and Class 1A national insurance contributions (employer) for 2010/11 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 24% 27%
Taxable benefit £4,320 £4,860
Tax (20% taxpayer) £864 £972
Tax (40% taxpayer) £1,728 £1,944
Tax (50% taxpayer) £2,160 £2,430
Employer’s Class 1A NIC £553 £622

 

Fuel benefit Petrol Diesel
Multiplier £18,000 £18,000
Taxable percentage 24% 27%
Taxable benefit £4,320 £4,860
Tax (20% taxpayer) £864 £972
Tax (40% taxpayer) £1,728 £1,944
Tax (50% taxpayer) £2,160 £2,430
Employer’s Class 1A NIC £553 £622

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VAT fuel scale charges

Fuel scale charges for VAT

VAT fuel scale charges for 1 month periods

CO2 band g/km From 1 May 2010 From 1 May 2009
120 or less 47.00 42.00
125 70.00 63.00
130 70.00 63.00
135 75.00 63.00
140 80.00 67.00
145 85.00 71.00
150 89.00 75.00
155 94.00 79.00
160 99.00 83.00
165 104.00 88.00
170 108.00 92.00
175 113.00 96.00
180 118.00 100.00
185 122.00 104.00
190 127.00 109.00
195 132.00 113.00
200 137.00 117.00
205 141.00 121.00
210 146.00 126.00
215 151.00 130.00
220 156.00 134.00
225 160.00 138.00
230 142.00
230 or more 165.00
235 or more 147.00

VAT fuel scale charges for 3 month periods

CO2 band g/km From 1 May 2010 From 1 May 2009
120 or less 141.00 126.00
125 212.00 189.00
130 212.00 189.00
135 227.00 189.00
140 241.00 201.00
145 255.00 214.00
150 269.00 226.00
155 283.00 239.00
160 297.00 251.00
165 312.00 264.00
170 326.00 276.00
175 340.00 289.00
180 354.00 302.00
185 368.00 314.00
190 383.00 327.00
195 397.00 339.00
200 411.00 352.00
205 425.00 365.00
210 439.00 378.00
215 454.00 390.00
220 468.00 403.00
225 482.00 416.00
230 428.00
230 or more 496.00
235 or more 441.00

VAT fuel scale charges for 12 month period

CO2 band g/km From 1 May 2010 From 1 May 2009
120 or less 570.00 505.00
125 850.00 755.00
130 850.00 755.00
135 910.00 755.00
140 965.00 805.00
145 1,020.00 855.00
150 1,080.00 905.00
155 1,135.00 960.00
160 1,190.00 1,010.00
165 1,250.00 1,060.00
170 1,305.00 1,110.00
175 1,360.00 1,160.00
180 1,420.00 1,210.00
185 1,475.00 1,260.00
190 1,530.00 1,310.00
195 1,590.00 1,360.00
200 1,645.00 1,410.00
205 1,705.00 1,465.00
210 1,760.00 1,515.00
215 1,815.00 1,565.00
220 1,875.00 1,615.00
225 1,930.00 1,665.00
230 1,715.00
230 or more 1,985.00
235 or more 1,765.00

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