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.

Company car
George Laingchild
Elvis Presley

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