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, 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% for 5 years from 6 April 2010.

You can find the appropriate percentage for 2010/11 using the following table:

CO2 emissions
(g/km)
Appropriate percentage
Petrol %
Diesel %
1 – 75
5
8
76 – 120
10
13
121 – 134
15
18
135 – 139
16
19
140 – 144
17
20
145 – 149
18
21
150 – 154
19
22
155 – 159
20
23
160 – 164
21
24
165 – 169
22
25
170 – 174
23
26
175 – 179
24
27
180 – 184
25
28
185 – 189
26
29
190 – 194
27
30
195 – 199
28
31
200 – 204
29
32
205 – 209
30
33
210 – 214
31
34
215 – 219
32
35
220 – 224
33
35
225 – 229
34
35
230 and above
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
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 from 1 June 2010 for employee private mileage reimbursement or employer reimbursement of business mileage in company cars are:
Petrol
Diesel
LPG
Up to 1400cc
12p
11p
8p
1401cc – 2000cc
15p
11p
10p
Over 2000cc
21p
16p
14p



The taxable car fuel benefit, for 2010/11, is calculated by multiplying £18,000 by the same percentage as applies (or would apply) for the car benefit.

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 177g/km of CO2.

If we assume the driver pays tax at 40%, the 2010/11 tax bill on the car is: £21,000 x 24% x 40% = £2,016.

If the employer provides any fuel used for private journeys and is not reimbursed for the cost, the 2010/11 tax bill for the fuel is: £18,000 x 24% x 40% = £1,728.


Company vans
The taxable benefit for the unrestricted use of company vans is £3,000 (with no reduction for older vans) plus a further £550 of taxable benefit if fuel is provided by the employer for private travel.

Van and fuel charge
Van
Fuel
Total
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
£384
£70.40
£454.40











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 will be no fuel benefit for such vans.