Company Car Tax

Company cars are a great way for businesses to reward staff as a benefit on top of their salary, unfortunately, HMRC is aware of this and levies tax on the perk, this is referred to as a Benefit-in-Kind (BIK) as the car is seen as an additional taxable benefit.

The amount of tax you pay is based on a number of factors, such as:

• The list price of the car before any non-taxable items (NOT the amount paid).
• The car fuel type (An additional 4% surcharge applies for diesel cars up to the maximum 37%).
• The cars Co2 emissions (see table below).
• Your tax band.

CO2 (g/km)	2019/20 BIK rate (%) – Petrol	2019/20 BIK rate (%) – Diesel
0 – 50	16	20
51 – 75	19	23
76 – 94	22	26
95 – 99	23	27
100 – 104	24	28
105 – 109	25	29
110 – 114	26	30
115 – 119	27	31
120 – 124	28	32
125 – 129	29	33
130 – 134	30	34
135 – 139	31	35
140 – 144	32	36
145 – 149	33	37
150 – 154	34	38
155 – 159	35	39
160 – 164	36	40
165 +	37	41

*Diesel cars that meet RDE2 are charged at the standard BIK percentage rate.

Here is an example to show you how the company car tax is calculated.

Example:

• List price is £37,500.00.
• Fuel type is Petrol.
• Emissions are 142g/km (BIK rate = 0.32).

Calculation: £37,500 * 0.32 = £12,000

Basic rate: £12,000 * 0.20 = Tax payable of £2,400

Higher rate: £12,000 * 0.40 = Tax payable of £4,800

Additional rate: £12,000 * 0.45 = Tax payable of £5,400

Fuel for personal journeys is taxed separately.

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