Company Car Taxes: Benefit In Kind Tax

8 Questions

CO2 emissions

To establish the car's value for tax purposes

Based on the car's P11D price, fuel type, and CO2 emissions

The car's purchase price, delivery charges, but excluding Road Fund Licence and First Year Registration Fee

It is added to their income and taxed accordingly

It increases the taxable benefit

To determine the taxable benefit of a company car

The car's purchase price, delivery charges, and any extras fitted

Study Notes

A company car is a car provided for an employee's private and business use, excluding those provided to sole traders or partners.
Company car taxes have income tax, VAT, and national insurance (NI) consequences.
Taxes and duties are based on CO2 emissions, affecting both employees and employers.

Employee-paid BIK tax rates depend on the car's P11D price, fuel type, and CO2 emissions.
P11D price is the list price of the car, excluding Road Fund Licence and First Year Registration Fee, but including delivery charges.
Extras fitted to the car (costing over £100) are included in the P11D price.
Drivers of company cars are taxed as if they have received a monetary amount equivalent to the car's value.

CO2 emissions (g/km) and electric range (miles) determine the tax rate percentage.
Tax rates for 2022-23 to 2027-28 are:
- 0 CO2 emissions: 2% to 5%
- 1-50 CO2 emissions:
  - >130 electric range: 2% to 5%
  - 70-129 electric range: 5% to 8%
  - 40-69 electric range: 8% to 11%
  - 30-39 electric range: 12% to 15%

Employer-paid NICs are based on the car's assessed benefit in kind value, which is also based on CO2 emissions.

8 Questions