Company car tax explained
Any employee, or director of a company, who is provided with a car, which can be used for private use, is liable to pay tax on the benefit of the car.
From April 2002, car tax is calculated using the vehicles list price or “P11D” price and its approved carbon dioxide (CO2) emissions rating. This is calculated as grammes per kilometre or g/km, and vehicles that produce less CO2 will benefit from a low car tax banding.
| CO2 emissions | Taxable % of list price | ||
|---|---|---|---|
| Rated in g/km | 2010/11 | 2011/12 | 2012/13 |
| 0 | 0 | 0 | 0 |
| 1-75 | 5 | 5 | 5 |
| 76-99 | 10 | 10 | 10 |
| 100-104 | 10 | 10 | 11 |
| 105-109 | 10 | 10 | 12 |
| 110-114 | 10 | 10 | 13 |
| 115-119 | 10 | 10 | 14 |
| 120-124 | 15 | 15 | 15 |
| 125-129 | 15 | 15 | 16 |
| 130-135 | 15 | 16 | 17 |
| 135-139 | 16 | 17 | 18 |
| 140-144 | 17 | 18 | 19 |
| 145-149 | 18 | 19 | 20 |
| 150-154 | 19 | 20 | 21 |
| 155-159 | 20 | 21 | 22 |
| 160-164 | 21 | 22 | 23 |
| 165-169 | 22 | 23 | 24 |
| 170-174 | 23 | 24 | 25 |
| 175-179 | 24 | 25 | 26 |
| 180-184 | 25 | 26 | 27 |
| 185-189 | 26 | 27 | 28 |
| 190-194 | 27 | 28 | 29 |
| 195-199 | 28 | 29 | 30 |
| 200-204 | 29 | 30 | 31 |
| 205-209 | 30 | 31 | 32 |
| 210-214 | 31 | 32 | 33 |
| 215-219 | 32 | 33 | 34 |
| 220-224 | 33 | 34 | 35 |
| 225-229 | 34 | 35 | 35 |
| 230 or over | 35 | 35 | 35 |
All vehicles fitted with a diesel engine will pay a 3% surcharge, up to a maximum of 35%.
From April 1st 2008, any vehicle with 120g/km or less will be taxed at a rate of 10% of the list price (13% for diesel vehicles.) This will be removed from April 2012.
Example
An employee is provided with a new Audi A3 2.0 TDI Sport 3dr Manual with Metallic Paint on 1st April 2010.
The Tax list price (P11D) when new is £19,920.00
The approved CO2 emission rating for this vehicle is 115 g/km, which equates to 10% of taxable list price.
To this you must add the 3% surcharge for diesel vehicles.
So, the taxable benefit to the employee is as follows.
£19,920.00 x (10% + 3%)
= £2,589.60 per year.
To calculate how much tax the employee will pay per year, this figure is multiplied by the employees tax level:
For a 22% taxpayer:
£2,589.60 × 22% = £569.71 per year or £47.47 per month.
For a 40% taxpayer:
£2,589.60 × 40% = £1,035.84 per year or £86.32 per month.
The above example is based on the rates for the tax years 2010/11 and 2011/12.)