The taxable benefit is calculated as a percentage of the car’s list price.
The calculation begins with the car’s CO2 emissions in grams per kilometre.
Then a deduction is made of 155 and the result divided by 5.That number is then rounded down (3.8 = 3) and 15 is added for petrol
or 18 added for diesel. The result is the taxable percentage.
| Petrol | Diesel | |
| Minimum rate* | 15% | 18% |
| Maximum rate | 35% | 35% |
*Special rates apply to very low emission diesel and alternative fuel cars.
However, for cars first registered before 1st January 1998 the taxablepercentage figures are:
| Petrol | Diesel | |
| Up to 1400cc | 15% | 15% |
| 1401 to 2000cc | 22% | 22% |
| Over 2000cc | 32% | 32% |
Chargeable on employees earning £8500 or over (including benefits) and directors The list price relates to the day before first registration and includes accessories The price is subject to an upper limit of £80,000 The price is reduced by the employees capital contribution when the car is first made available, subject to a maximum deduction of £5,000 Special rules apply to cars at least 15 years old with a market value of £15,000 or more| Benefit | ||
| Under 4 years at the end of the tax year | £500 | |
| 4 years or over | £350 | |
This is per vehicle and includes fuel for private use.
Inland Revenue mileage Rates
For Cars:
Approved rates for employees using their own cars for business are 40p per mile for the first 10,000 miles and 25p per mile thereafter. Income tax and NIC may be due on higher rates and tax relief on lower rates.
For fuel only:
Advisory rates for an employee’s private mileage reimbursement or employer reimbursement of business mileage are:
| Petrol | Diesel | LPG | |
| Up to 1400cc | 10p | 9p | 6p |
| 1401 to 2000cc | 12p | 9p | 7p |
| Over 2000cc | 14p | 12p | 9p |
Car Fuel Benefit
Where the cost of all fuel for private use is borne by the employee the fuel benefit is nil. Otherwise, the taxable benefit is calculated as the car benefit percentage (see above) and VAT becomes payable as follows:
| Scale Charge | VAT Due | |||||
| Petrol | Diesel | Petrol | Diesel | |||
| Up to 1400cc | £237 | £225 | £35.29 | £33.51 | ||
| 1401 to 2000cc | £300 | £225 | £44.68 | £33.51 | ||
| Over 2000cc | £442 | £283 | £65.82 | £42.14 | ||
Capital Allowances
Motor Cars 25% Maximum of £3000 p.a. per car
Plant and machinery
- First year allowance 40% for small and medium companies
- Writing down allowance 25% on a reducing balance