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What happens if you keep your company car?

From April 2005 users have been taxed on 35% of the list price of cars that emit 240g/km or more of CO2. The tax burden reduces by 1% for each 5g/km reduction in CO2 emissions, to a minimum of 15% for cars producing 140g/km or less. Diesel cars that don’t conform to Euro IV emissions standards will incur a 3% surcharge, up to the maximum of 35%, whilst green vehicles like hybrid cars
will benefit from reductions.

Although diesel vehicles generally emit lower levels of CO2 than petrol vehicles, there are other pollutants associated with diesel, such as oxides of nitrogen and sulphur dioxide, which the surcharge takes into account.

The true cost of your company car

Using the above table, first calculate the percentage price of the P11D value to be taxed. This amount is then deducted from your personal tax allowance. In practice, to calculate what this means to you per year, you can simply multiply this amount by your personal tax weighting.

For example, a basic rate tax payer driving a Toyota Avensis 1.8 T3X.
1. C02 Emissions of 171 g/km equals a benefit in kind scale charge of 21%
2. P11D Value of £17,365 x 21% equals £3646 (to be deducted from your personal tax allowance)
3. Equates to a cost of £802 per annum (assuming basic rate tax of 22%)

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