Company cars

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 following the end of the tax year.

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.

2009/10 taxable benefits table

CO2 in g/km*	Taxable %		CO2 in g/km*	Taxable %
	Petrol	Diesel		Petrol	Diesel
Less than 121	10%	13%	185 to 189	25%	28%
121 to 139	15%	18%	190 to 194	26%	29%
140 to 144	16%	19%	195 to 199	27%	30%
145 to 149	17%	20%	200 to 204	28%	31%
150 to 154	18%	21%	205 to 209	29%	32%
155 to 159	19%	22%	210 to 214	30%	33%
160 to 164	20%	23%	215 to 219	31%	34%
165 to 169	21%	24%	220 to 224	32%	35%
170 to 174	22%	25%	225 to 229	33%	35%
175 to 179	23%	26%	230 to 234	34%	35%
180 to 184	24%	27%	235 and over	35%	35%
* 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
• 6% for electric-only cars.

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Car fuel benefit

The multiplier for car fuel benefit has increased to £16,900.

Car and fuel benefit calculation

The amount chargeable to income tax (user) and Class 1A national insurance contributions (employer) for 2008/09 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	23%	26%
Taxable benefit	£4,140	£4,680
Tax (20% taxpayer)	£828	£936
Tax (40% taxpayer)	£1,656	£1,872
Employer’s Class 1A NIC	£530	£599

 

Fuel benefit	Petrol	Diesel
Multiplier	£16,900	£16,900
Taxable percentage	23%	26%
Taxable benefit	£3,887	£4,394
Tax (20% taxpayer)	£777.40	£878.80
Tax (40% taxpayer)	£1,554.80	£1,757.60
Employer’s Class 1A NIC	£497.54	£562.43

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VAT fuel scale charges

Fuel scale charges for VAT for use from 1 May 2009

• VAT fuel scale charges for 1 month period
• VAT fuel scale charges for 3 month periods
• VAT fuel scale charges for 12 month periods

VAT fuel scale charges for 1 month period

CO2 band g/km	VAT fuel scale charge 1 month period
120 or less	42.00
125	63.00
130	63.00
135	63.00
140	67.00
145	71.00
150	75.00
155	79.00
160	83.00
165	88.00
170	92.00
175	96.00
180	100.00
185	104.00
190	109.00
195	113.00
200	117.00
205	121.00
210	126.00
215	130.00
220	134.00
225	138.00
230	142.00
235 or more	147.00

VAT fuel scale charges for 3 month periods

CO2 band	VAT fuel scale charge 3 month period £
120 or less	126.00
125	189.00
130	189.00
135	189.00
140	201.00
145	214.00
150	226.00
155	239.00
160	251.00
165	264.00
170	276.00
175	289.00
180	302.00
185	314.00
190	327.00
195	339.00
200	352.00
205	365.00
210	378.00
215	390.00
220	403.00
225	416.00
230	428.00
235 or more	441.00

VAT fuel scale charges for 12 month periods

CO2 band	VAT fuel scale charge 12 month period £
120 or less	505.00
125	755.00
130	755.00
135	755.00
140	805.00
145	855.00
150	905.00
155	960.00
160	1,010.00
165	1,060.00
170	1,110.00
175	1,160.00
180	1,210.00
185	1,260.00
190	1,310.00
195	1,360.00
200	1,410.00
205	1,465.00
210	1,515.00
215	1,565.00
220	1,615.00
225	1,665.00
230	1,715.00
235 or more	1,765.00

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