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.
From April 2015, the five year exemption for zero carbon and the lower rate for ultra-low carbon emission cars will come to an end. Two new bands will be introduced for ultra-low emission vehicles (ULEVs). These will be set at 0-50 g/km and 51-75 g/km. The appropriate percentages for the remaining bands will increase by 2% for cars emitting more than 75 g/km, to a new maximum of 37%.
You can find the appropriate percentage for 2015/16 using the following table:
| CO2 emissions (g/km) |
Appropriate percentage | |
|---|---|---|
| Petrol % | Diesel % | |
| 0-50 | 5 | 8 |
| 51-75 | 9 | 12 |
| 76-94 | 13 | 16 |
| 95-99 | 14 | 17 |
| 100-104 | 15 | 18 |
| 105-109 | 16 | 19 |
| 110-114 | 17 | 20 |
| 115-119 | 18 | 21 |
| 120-124 | 19 | 22 |
| 125-129 | 20 | 23 |
| 130-134 | 21 | 24 |
| 135-139 | 22 | 25 |
| 140-144 | 23 | 26 |
| 145-149 | 24 | 27 |
| 150-154 | 25 | 28 |
| 155-159 | 26 | 29 |
| 160-164 | 27 | 30 |
| 165-169 | 28 | 31 |
| 170-174 | 29 | 32 |
| 175-179 | 30 | 33 |
| 180-184 | 31 | 34 |
| 185-189 | 32 | 35 |
| 190-194 | 33 | 36 |
| 195-199 | 34 | 37 |
| 200-204 | 35 | |
| 205-209 | 36 | |
| 210 or more | 37 | |
How to find out how much CO2 your company car emits – see:
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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 benefit
The taxable car fuel benefit, for 2015/16, is calculated by applying the CO2 based car benefit percentage to the car fuel benefit charge multiplier of £22,100.
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: | |
|---|---|---|
| Engine Size | Petrol | LPG |
| 1400cc or less | 11p | 8p |
| 1401cc - 2000cc | 13p | 10p |
| Over 2000cc | 20p | 14p |
| Engine Size | Diesel | |
| 1600cc or less | 9p | |
| 1601cc - 2000cc | 11p | |
| Over 2000cc | 14p | |
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 2015/16 tax bill on the car is: £21,000 x 30% x 40% = £2,520
If the employer provides any fuel used for private journeys and is not reimbursed for the cost, the 2015/16 tax bill for the fuel is: £22,100 x 30% x 40% = £2,652.
Company vans
The taxable benefit for the unrestricted use of company vans is £3,150 plus a further £594 of taxable benefit if fuel is provided by the employer for private travel.
| Van and fuel charge | Van | Fuel | Total |
|---|---|---|---|
| Tax (20% taxpayer) | £630 | £118.80 | £748.80 |
| Tax (40% taxpayer) | £1,260 | £237.60 | £1,497.60 |
| Tax (45% taxpayer) | £1,417.50 | £267.30 | £1,684.80 |
| Employer's class 1A NICs | £434.70 | £81.97 | £516.67 |
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 £3,150 is reduced by 80% to £630 for vans which cannot produce C02 engine emissions under any circumstances when driven. There is no fuel benefit for such vans.