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Vehicle Benefits


Chargeable on employees earning £8,500 or over (including benefits), and directors.

Car Benefit

The taxable benefit is calculated as a percentage of the list price of the car, on the day before it was first registered, plus certain accessories. This percentage depends upon the rate at which the car emits carbon dioxide (CO2), and the fuel type.

For cars which cannot produce CO2 engine emissions under any circumstances when driven, the appropriate percentage is reduced to 0%, thereby reducing the car benefit charge to nil.

For cars emitting between 1 and 75g/km the appropriate percentage is reduced to 5% for 5 years from 6 April 2010.

You can find the appropriate percentage for 2010/11 using the following table:

CO2 emissions
(g/km)
Appropriate percentage
Petrol % Diesel %
1 - 75 5 8
76 - 120 10

13

121 - 134 15 18
135 - 139 16 19
140 - 144 17 20
145 - 149 18 21
150 - 154 19 22
155 - 159 20 23
160 - 164 21 24
165 - 169 22 25
170 - 174 23 26
175 - 179 24 27
180 - 184 25 28
185 - 189 26 29
190 - 194 27 30
195 - 199 28 31
200 - 204 29 32
205 - 209 30 33
210 - 214 31 34
215 - 219 32 35
220 - 224 33 35
225 - 229 34 35
230 and above 35 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 capacity Taxable %
Up to 1400cc 15%
1401 - 2000cc 22%
Over 2000cc 32%

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.

Fuel-Only Mileage Rates
HMRC advisory mileage rates at the time of the Budget for employee private mileage reimbursement or employer reimbursement of business mileage in company cars are:
  Petrol Diesel LPG
Up to 1400cc 12p 11p 8p
1401cc - 2000cc 15p 11p 10p
Over 2000cc 21p 16p 14p

The taxable car fuel benefit, for 2010/11, is calculated by multiplying £18,000 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 £21,000. It runs on petrol, and emits 177 g/km of CO2.

If we assume the driver pays tax at 40%, the 2010/11 tax bill on the car is: £21,000 x 24% x 40% = £2,016

If the employer provides any fuel used for private journeys and is not reimbursed for the cost, the 2010/11 tax bill for the fuel is: £18,000 x 24% x 40% = £1,728.

Company vans

The taxable benefit for the unrestricted use of company vans is £3,000 (with no reduction for older vans) plus a further £550 of taxable benefit if fuel is provided by the employer for private travel.

Van and fuel charge Van Fuel Total
Tax (20% taxpayer) £600 £110 £710
Tax (40% taxpayer) £1,200 £220 £1,420
Tax (50% taxpayer) £1,500 £275 £1,775
Employer's class 1A NICs £384 £70.40 £454.40

Van drivers can avoid a benefit charge if they agree not to use the van for personal journeys. Driving to and from work is acceptable so long as there is a reasonable amount of business use.

The flat rate of £3,000 is reduced to nil for vans which cannot produce C02 engine emissions under any circumstances when driven. There will be no fuel benefit for such vans.

 




 
 
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