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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 2014/15 using the following table:
 

CO2 emissions
(g/km)
Appropriate percentage
Petrol % Diesel %
Zero 0 0
Up to 75 5 8
76-94 11 14
95-99 12 15
100-104 13 16
105-109 14 17
110-114 15 18
115-119 16 19
120-124 17 20
125-129 18 21
130-134 19 22
135-139 20 23
140-144 21 24
145-149 22 25
150-154 23 26
155-159 24 27
160-164 25 28
165-169 26 29
170-174 27 30
175-179 28 31
180-184 29 32
185-189 30 33
190-194 31 34
195-199 32 35
200-204 33 35
205-209 34 35
210 or more 35 35

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 capacity Taxable %
Up to 1400cc 15%
1401 - 2000cc 22%
Over 2000cc 32%

Car fuel benefits

The taxable car fuel benefit, for 2014/15, is calculated by applying the CO2 based car benefit percentage to the car fuel benefit charge multiplier of £21,700.
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 15p 9p
1401cc - 2000cc 16p 11p
Over 2000cc 24p 17p
Engine Size Diesel  
1600cc or less 12p  
1601cc - 2000cc 14p  
Over 2000cc 17p  

 

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 2014/15 tax bill on the car is: £21,000 x 28% x 40% = £2,352
 
If the employer provides any fuel used for private journeys and is not reimbursed for the cost, the 2014/15 tax bill for the fuel is: £21,700 x 28% x 40% = £2,430.40.

Company vans

The taxable benefit for the unrestricted use of company vans is £3,090 plus a further £581 of taxable benefit if fuel is provided by the employer for private travel.
 

Van and fuel charge Van Fuel Total
Tax (20% taxpayer) £618 £116.20 £734.20
Tax (40% taxpayer) £1,236 £232.40 £1,468.40
Tax (50% taxpayer) £1,390.50 £261.45 £1,651.95
Employer's class 1A NICs £426.42 £80.18 £506.60

 

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 £3,090 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.
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