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.

For cars which cannot produce CO2 engine emissions under any circumstances when driven (‘zero emission cars’, including those powered solely by electricity), the appropriate percentage is reduced to 0%, thereby reducing the car benefit charge to nil.

For cars emitting between 1 and 75g/km the appropriate percentage is reduced to 5% (8% for diesel) for 5 years from 6 April 2010.

You can find the appropriate percentage for 2012/13 using the following table:

CO2 emissions
(g/km)
Appropriate percentage
Petrol %Diesel %
Zero00
Up to 7558
76-991013
100-1041114
105-1091215
110-1141316
115-1191417
120-1241518
125-1291619
130-1341720
135-1391821
140-1441922
145-1492023
150-1542124
155-1592225
160-1642326
165-1692427
170-1742528
175-1792629
180-1842730
185-1892831
190-1942932
195-1993033
200-2043134
205-2093235
210-2143335
215-2193435
220 and above3535

 

How to find out how much CO2 your company car emits – see:

  • the car’s V5 registration document
  • your dealer
  • the data pages of car magazines (current models)

 

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 capacityTaxable %
Up to 1400cc15%
1401 – 2000cc22%
Over 2000cc32%

 

Car fuel benefits

The taxable car fuel benefit, for 2012/13, is calculated by multiplying £20,200 by the same percentage as applies (or would apply) for the car benefit.

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
PetrolLPG
1400cc or less15p10p
1401cc – 2000cc18p12p
Over 2000cc26p18p
Engine Size
Diesel
1600cc or less13p
1601cc – 2000cc15p
Over 2000cc19p

 

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 2012/13 tax bill on the car is: £21,000 x 26% x 40% = £2,184

If the employer provides any fuel used for private journeys and is not reimbursed for the cost, the 2012/13 tax bill for the fuel is: £20,200 x 26% x 40% = £2,100.80.

Company vans

The taxable benefit for the unrestricted use of company vans is £3,000 plus a further £550 of taxable benefit if fuel is provided by the employer for private travel.

Van and fuel charge
VanFuelTotal
Tax (20% taxpayer)£600£110£710
Tax (40% taxpayer)£1,200£220£1,420
Tax (50% taxpayer)£1,500£275£1,775
Employer’s class 1A NICs£414£75.90£489.90

 

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 £3,000 is reduced to nil for vans which cannot produce C02 engine emissions under any circumstances when driven. There is no fuel benefit for such vans.