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%)
