Employer Provided Cars
Employer provided cars - this is probably the most common benefit and the taxable amount will generally be based on a range of 10% – 35% of the manufacturer’s list price (including accessories) of the car. The taxable benefit depends upon the carbon dioxide emissions of the car.
There are reductions for unavailability of the car and where the employee makes a contribution towards the cost of the car.
The current regime for taxing employer provided cars (commonly referred to as company cars) is intended:
- to encourage manufacturers to produce cars which are more environmentally friendly and
- to give employee drivers and their employers a tax incentive to choose more fuel-efficient and environmentally friendly vehicles.
The rules
Employer provided cars are taxed by reference to the list price of the car but graduated according to the level of its carbon dioxide (CO2) emissions.
Percentage charges – The percentage charge for the majority of cars is between 10% and 35%. The emissions table for 2011/12 is set out for you in the guide attached.
Examples
Jane was provided with a new company car, a Mercedes CLK 430, on 6 April 2010. The CO2 emissions are 281 grams per kilometre. Jane regularly drives 20,000 business miles each year.
Jane’s benefit in 2011/12 and later years will be £50,000 x 35% = £17,500
- Car Emissions for 2011-2012
Phil has a company car, a BMW 318i, which had a list price of £21,000 when it was provided new on 6 April 2011. Phil does fewer than 1,000 business miles each year. The CO2 emissions are 184 grams per kilometre. Note: The CO2 emissions are rounded down to the nearest 5 grams per kilometre – in this case 180.
Phil’s benefit for 2010/11 is: £21,000 x 26% = £5,460
If Phil continues to drive the same car his benefit will increase to 27% of list price for 2012/13
