Company car tax

Find out more information on company car tax or use our online tax calculator. You pay tax on the value to you of the company car, which depends on things like how much it would cost to buy and the type of fuel it uses. This value of the car is reduced if: you have it.

Company Car Tax Calculator. Benefit in kind tax on company cars is based on carbon dioxide emissions and the list price. Different rules apply according to the type of fuel used.

Choose the car using the form below. As an employer, if you provide company cars or fuel for your employees’ private use, you’ll need to work out the taxable value so you can report this to HM Revenue and Customs (HMRC). A company car is an extra benefit provided by your employer, and is known as a benefit in kind (BIK) tax.

When you’re given a company car, the cash value of the car is added to your salary. A tax is then taken off the final sum.

Unfortunately, this could raise your rate of tax if you’re close to a tax threshold. Do company cars raise taxes?

This company car tax is called Benefit-In-Kind (BIK) tax, as the cars are seen as an additional taxable benefit that falls outside of your standard salary with its income tax and National Insurance.

What is the company car tax rate? All you need to know about company car tax including how it is calculated and what it means for you as a company car driver.

You don’t start paying tax until you earn over £16a year, after which percent will be paid. Although the new tax bands for higher-emissions cars are between 1% and 6% lower than current levels (apart from the highest polluters in the top 37% bracket), any reductions will be more than. As above, your income tax band affects the amount of company-car tax you pay. Your company car is classed as a fringe benefit by the Government, so it incurs Benefit-in-Kind (BiK) taxation.

The amount of company car tax you’ll pay can be calculated with a simple sum. The P11D value multiplied with the COemission bracket is called the Benefit-in-kind value, often abbreviated to BIK. The BIK value is then multiplied again by the income tax bracket you fall into (20%, 40% or 45%).

Read more about cash allowance and car salary sacrifice scheme rules below. In order to help simplify things for you we have provided a calculator that works out company car tax the same way your employer would - by adding the taxable BIK to your regular income. One of the most common ways of ensuring you don’t have to pay company car tax is to get cars that are simply ‘pool’ cars, or that are kept on site and used for business reasons only.

However, if you do need to use your company car for personal use then the only thing you can do is look for a car that emits a low amount of CO2. Below is a list of currently available makes. List of all BMW models.

Familiar company car tax terms. Benefit-in-kind (BIK) - this is any benefit which employees receive from employment but are not included in a salary.

The obvious example in our case is company cars, which are taxed according to the income of the employee.

Emissions - the amount of gas the car emits from the exhaust. Measured in terms of COfor. The bill for a 40% taxpayer with a Jaguar I-Pace HSE or Tesla Model S Long Range owner will drop from almost £0a year to around £600.

It used to be that having a company car was a great perk. They will, however, be exempt from the salary sacrifice changes. These changes will change the way salary sacrifice schemes are taxed.

Instead of enjoying the tax reductions they enjoy now, salary sacrifice schemes will be taxed the same as if they were the cash equivalent. A company car allowance is a cash allowance that is added to your annual salary, which allows you to buy or lease a vehicle yourself.

While you do not have to worry about company car tax rates with a company car allowance, you will still be taxed. Since the allowance is paid as part of your salary, it will be taxed at the normal income tax rate. Road tax is one of the key costs you’ll still need to cover with a company car.

Since the vehicle you drive can make a big difference to car tax rates, typically you will have a more restricted choice of cars under a company car scheme. If your company car package includes fuel, you will also need to pay Car Fuel Benefit each month. As hybrid cars have lower tailpipe CO due to their improved fuel economy, company car tax for hybrid cars is generally lower than it would be for a non-hybrid equivalent car.

With COlevels being reduced by around 20%-25%, hybrid cars are placed many tax bands lower than would otherwise be the case. If a classic car appeals to you, then why not look at the company car route and speak to Jan Friend who can check the value of the car benefit in kind and notify HMRC accordingly.