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Tax and national insurance contributions (NICs) are calculated on the benefit-in-kind (BIK) on a car, which is determined, principally, by the price of the car and its official CO2 emissions rating. The list price of the car when new (including most accessories) is multiplied by the indicated percentage from the table below, using the official emissions rating for the appropriate fuel of the car to derive the BIK.
2012/13 company car taxable benefits table
|CO2 emissions (g/km)*||Petrol||Diesel|
|1 to 75||5%||8%|
|76 to 99||10%||13%|
|100 to 104||11%||14%|
|105 to 109||12%||15%|
|110 to 114||13%||16%|
|114 to 119||14%||17%|
|120 to 124||15%||18%|
|125 to 129||16%||19%|
|130 to 134||17%||20%|
|135 to 139||18%||21%|
|140 to 144||19%||22%|
|145 to 149||20%||23%|
|150 to 154||21%||24%|
|155 to 159||22%||25%|
|160 to 164||23%||26%|
|165 to 169||24%||27%|
|170 to 174||25%||28%|
|175 to 179||26%||29%|
|180 to 184||27%||30%|
|185 to 189||28%||31%|
|190 to 194||29%||32%|
|195 to 199||30%||33%|
|200 to 204||31%||34%|
|205 to 209||32%||35%|
|210 to 214||33%||35%|
|215 to 219||34%||35%|
|220 and over||35%||35%|
*The exact CO2 figure is rounded down to the nearest 5g/km.
Cars that cannot emit CO2 by being driven have a benefit of 0%.
Current advisory fuel mileage rates (for a company car)
|Rates per mile||Rates per mile||Rates per mile|
|Up to 1400cc*||15p||12p||11p|
|1401cc** - 2000cc||18p||15p||13p|
|2001cc and over||26p||18p||19p|
*1600cc for diesel cars
**1601cc for diesel cars
These rates are normally reviewed quarterly depending on changes in the price of fuel, and changes (if any) take effect on 1 March, 1 June, 1 September and 1 December each year, so the next change in rates will be due on 1 September 2012.
If the employee uses a privately owned car for business journeys, the employer may reimburse the costs at the following standard rates without the employee incurring a tax or NIC charge.
|Vehicle||First 10,000 miles||Thereafter|
If the employer reimburses at a lower rate per mile, the employee is permitted to claim tax relief on the shortfall.
Vehicle excise duty rates for cars from 1 April 2012
|For cars registered on or after 1 March 2001
|Band||g/km||First year rate (£)
||Standard rate (£)
|A||Less than 101||0||0|
|B||101 to 110||0||20|
|C||111 to 120||0||30|
|D||121 to 130||0||100|
|E||131 to 140||120||120|
|F||141 to 150||135||135|
|G||151 to 165||170||170|
|H||166 to 175||275||195|
|I||176 to 185||325||215|
|J||186 to 200||460||250|
|K*||201 to 225||600||270|
|L||226 to 255||815||460|
*Includes cars emitting over 225g/km registered between 1 March 2001 and 23 March 2006.
There is a discount of £10 for cars using alternative fuel.
For cars registered before 1 March 2001 the VED is £135 for engines less than 1549cc, £220 for 1549cc and above.
Company car fuel benefit
The company car fuel benefit is calculated by multiplying a factor by the same percentage as is used to calculate the car benefit which for 2012/13 is £20,200 (2011/12 £18,800).
Legislation will be introduced in Finance Bill 2012 to increase by one percentage point the level of the relevant percentage of the list price for company cars that is subject to tax. The tax charge applies to cars emitting more than 75g of carbon dioxide per kilometre up to a maximum of 35%. In both 2015/16 and 2016/17, the appropriate percentages of the list price subject to tax will increase by 2%, to a maximum of 37%.
There is currently a diesel supplement but this will be removed in April 2016, as diesel cars will be required to have the same air emissions quality as petrol cars from September 2015.
Company car tax fuel benefit charge
There is currently a tax charge on employees who receive free fuel from their employers and do not make a reimbursement to cover the cost of the private usage of the fuel. The fuel benefit is based on the same percentage as that used to compute the car benefit and depends upon the carbon dioxide emissions of the vehicle.
The fuel benefit charge is calculated by multiplying the appropriate percentage and the fuel multiplier of £20,200 from 6 April 2012 (previously £18,800). There is a further intention to increase the £20,200 from 6 April 2013 by two % above the annual rate of RPI increase to September 2012.