The taxable benefit is calculated as a percentage of the car's UK list price (this is not necessarily the price paid for the vehicle). The calculation begins with the car's CO2 emissions in grams per kilometre. For cars registered on or after 1st January 1998 you can find your taxable percentage for 2008/09 using the following table:
| CO2 g/km | Taxable % Petrol / Diesel |
CO2 g/km | Taxable % Petrol / Diesel |
CO2 g/km | Taxable % Petrol / Diesel |
||
|---|---|---|---|---|---|---|---|
| 120 and below | 10% / 13% | ||||||
| 121 to 139 | 15% / 18% | 170 to 174 | 22% / 25% | 205 to 209 | 29% / 32% | ||
| 140 to 144 | 16% / 19% | 175 to 179 | 23% / 26% | 210 to 214 | 30% / 33% | ||
| 145 to 149 | 17% / 20% | 180 to 184 | 24% / 27% | 215 to 219 | 31% / 34% | ||
| 150 to 154 | 18% / 21% | 185 to 189 | 25% / 28% | 220 to 224 | 32% / 35% | ||
| 155 to 159 | 19% / 22% | 190 to 194 | 26% / 29% | 225 to 229 | 33% / 35% | ||
| 160 to 164 | 20% / 23% | 195 to 199 | 27% / 30% | 230 to 234 | 34% / 35% | ||
| 165 to 169 | 21% / 24% | 200 to 204 | 28% / 31% | 235 and over | 35% / 35% |
To find out how much CO2 in grams per kilometre the vehicle emits, please see the vehicles registration document or follow the link to the Vehicle Certification Agency website http://www.vcacarfueldata.org.uk.
For cars first registered before 1st January 1998 then use the following table regardless of fuel type:
| Engine capacity | Taxable % |
|---|---|
| Up to 1400cc | 15% |
| 1401 - 2000cc | 22% |
| Over 2000cc | 32% |
Car benefits are chargeable on employees earning £8,500 per annum or more including benefits and all directors regardless of the level of salary.
The list price is reduced for any Capital Contributions made when the car is first made available, subject to a maximum of £5,000.
Where the cost of all the fuel for private use is borne by the employee the fuel benefit is nil. If the employer pays for all the fuel in the car including any used for private mileage by the employee then the fuel benefit is calculated by using the same car benefit percentage and applying this percentage to the fuel multiplier of £16,900.
The taxable benefit for the unrestricted private use of company vans is £3,000 (with no reduction for older vans) plus a further £500 of taxable benefit if the employer provides fuel for private travel purposes. So a taxpayer paying at the respective rates would be as follows:
| Van and fuel charge | Van | Fuel | Total |
|---|---|---|---|
| Tax (20% taxpayer) | £600 | £100 | £700 |
| Tax (40% taxpayer) | £1,200 | £200 | £1,400 |
| Employer's class 1A NICs | £384 | £64 | £448 |
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.
Employers also pay Class 1A NIC on the taxable benefits, which is currently at a rate for the 2008/09 tax year of 12.8%.
VAT is payable by the business per VAT quarter by reference to the CO2 emissions as follows:
| CO2 g/km | VAT on charge | CO2 g/km | VAT on charge | CO2 g/km | VAT on charge |
|---|---|---|---|---|---|
| 120 or less | £20.55 | 165 | £43.19 | 200 | £57.49 |
| 121 to 139 | £30.83 | 170 | £45.13 | 205 | £59.57 |
| 140 | £32.91 | 175 | £47.21 | 210 | £61.66 |
| 145 | £34.85 | 180 | £49.30 | 215 | £63.74 |
| 150 | £36.94 | 185 | £51.38 | 220 | £65.83 |
| 155 | £39.02 | 190 | £53.47 | 225 | £67.77 |
| 160 | £41.11 | 195 | £55.55 | 230 | £69.85 |
| 235 and over | £71.94 |
The following mileage rates apply to employees using their own vehicles for business journeys. Income tax and National Insurance Contributions are due when mileage rates paid to employees are in excess of these rates. Employees can claim tax relief on any difference paid for business miles below these rates. A tax/NI free rate of 5p per mile is also allowed to any passengers on the same business journey.
| Flat Rate | First 10,000 Miles | Miles over 10,000 |
|---|---|---|
| Car / Van | 40p | 25p |
| Motorcycle | 24p | 24p |
| Bicycle | 20p | 20p |
The above table includes reimbursements of insurance costs, fuel and depreciation of an employee's vehicle. The table below is the rate for the fuel element of the cost only.
| Engine Capacity | Petrol | Diesel | LPG |
|---|---|---|---|
| Up to 1400cc | 11p | 11p | 7p |
| 1401cc - 2000cc | 13p | 11p | 8p |
| Over 2000cc | 19p | 14p | 11p |
This data for legislative rates is for information purposes only and PG Business Solutions are not responsible for actions taken or not taken in respect of information provided. Should you wish to know more about how they affect you or your business liability then please contact us for specified tailored advice suited to your individual circumstances. Errors and omissions in this information are excepted.