Companies that use vehicles as part of their business, either as a benefit in kind or a combination of business and private use are liable for taxes. The percentage of tax payable is based on the car´s CO2 emissions as defined by HMRC together with the annual income of the person who drives the car. This article deals with everything you need to know about company car tax including who is liable to pay and how tax is calculated.
First let´s deal with earnings. If you earn £32,010 or less per annum you are liable for 20 per cent of the total P11D value of your car in relation to the table below. If you earn over £150,000 each year you will pay 50% of the P11D value and anybody that has a salary in between these two thresholds must pay 40 per cent.
The table below shows the P11D value for the next four tax years. If your car´s CO2 emissions fall between bands, round the number down to the next tax band.
Company car tax tables
|Taxable percentage of P11D value|
|220 or above||35||35||35||35||37||37||37|
How is company car tax calculated?
In order to work out the amount of tax that is payable on your company car you need to know:
- The CO2 emissions of your vehicle
- The recommended on the road price (this is your P11D value)
- The kind of fuel the vehicle uses
- The salary of the person who most drives the car
To calculate the car tax identify your BIK percentage from the table above and multiply this by the road value of your car. This gives you your BIK value. Then multiply your BIK value by either 20%, 40% or 50% depending on the salary the car is registered to.
If you only use your company car sparingly and it is also used for private purposes you have the option to select the standard rate for mileage in your self assessment tax return. For more information about company car tax contact a qualified accountant at Taxaccolega, a low fixed fee accountant in London, on 08000 235 234 for advice.