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How Does Company Car Tax Work? - Car Leasing Advice

How do i work out how much a car will cost me each month. what's the p11d value of a car?


If you’re given a company car and earn more than £8500, you’ll be charged tax on it. The rate is calculated based on several factors: the list price, the carbon dioxide emissions, the kind of fuel used and any contributions you make towards the car.

Simply put, the tax liability is charged as a percentage of the car’s list price, with a higher percentage for more polluting cars.

You’ll need the following information to work out how much a car will cost you each month.

1. Car’s p11d value

This is the list price of the car, including vat and any options that cost more than £100. It does not include the £55 first registration fee or the ved (road tax) payment. you can reduce this value, and your tax liability, by making a capital contribution towards the car of up to £5000.  

2. Car’s co2-based tax liability percentage

You’ll find this figure in the running costs section of the car reviews on cars emitting less than 120g/km co2 are charged at 10%. the rate jumps to 15% between 120 and 130g/km, and then rises 1% with each 5g/km to a maximum charge of 35% for cars emitting 225g/km or more.

Diesel cars are charged an extra 3% compared with petrol cars with the same emissions. Hybrid cars get a 3% reduction, while all electric cars are taxed at 9%.

Doing your sums

Multiply the figure from 1 above by the percentage in 2. then multiply this figure by 22% if you are a lower-rate taxpayer, or 40% if you are a higher-rate taxpayer to calculate your annual tax bill. divide this by 12 to work out a monthly bill.

To save time, you can use’s company car tax calculator here:

Additional tax is payable if your employer contributes towards fuel that you use for non-work driving.

An employer which leases cars for its employees can reclaim 50% of the vat charged on rental payments.


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