c - Company cars/tax

05 June 2006
Non Car Person

Company cars/tax - If your firm provides you with a company car you'll have to pay benefit-in-kind tax on it.

The more carbon dioxide (CO2) your car produces, the more you pay.

Your company car tax bill is calculated from a percentage of your car's list price which includes the cost of any factory-fitted options, but excludes the first registration fee and vehicle excise duty (this is the car's so-called P11D value). This percentage is determined by a scale from 15% to 35% of the price according to how many grammes per kilometre of carbon dioxide the car produces.

An extra 3% is added to any diesel tax calculations compared with a petrol with the same CO2 output. This is because the Government believes diesels are more harmful to our health because of higher nitrous oxide and particulate emissions.

Tax bills are then calculated as 20% or 40% of that figure each year, depending on which income bracket you're in.

You can look up your car's CO2 emissions, tax scale and monthly payments in the running cost section of our reviews.


Want to know the difference between your APRs and your PCPs? Our Glossary will guide you through the minefield of car-buying terms.

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