What are the Tax Rates for Company cars and vans?

Employees and directors are liable to income tax on a benefit in kind if they have the use of a company car or van made available to them by their employer. For cars, the taxable amount of benefit is a percentage of their original list price. The percentage is determined by the car’s CO2 emissions. For vans there is a fixed charge regardless of CO2 emission. The table below shows the percentages for cars.

When calculating the car benefit the price used is the full list price (inclusive of VAT and delivery charges) at the time the car is first registered.

The price takes into account optional accessories provided with the car and the list price of accessories costing £100 or more added to the car. The cost of in-car mobile telephones is ignored for this purpose as are the costs of certain security enhancements.

The cost of accessories designed for the disabled can be left out of the price used. If the disabled driver has to drive an automatic car, the CO2 figure is that of the equivalent manual car.

Where an employer provides the employee or director with fuel for personal journeys a benefit in kind arises. This is calculated by applying the percentage applicable to the car from the table below to a fixed amount: £22,200 for 2016/17; £22,600 for 2017/18 and £23,400 for 2018/19.

Autumn Budget 2017: Proposal to exempt employer provided electricity for electric or hybrid cars from being a taxable benefit w.e.f 6 April 2018.

Autumn Budget 2017: Proposal to increase the diesel supplement from 3% to 4% w.e.f 6 April 2018.

2016/17
2017/18
2018/19
CO2g/km
Petrol (%)
Diesel (%)
Petrol (%)
Diesel (%)
Petrol (%)
Diesel (%)
0
7
10
9
12
13
17
1-50
7
10
9
12
13
17
51-75
11
14
13
16
16
20
76-94
15
18
17
20
19
23
95-99
16
19
18
21
20
24
100-104
17
20
19
22
21
25
105-109
18
21
20
23
22
26
110-114
19
22
21
24
23
27
115-119
20
23
22
25
24
28
120-124
21
24
23
26
25
29
125-129
22
25
24
27
26
30
130-134
23
26
25
28
27
31
135-139
24
27
26
29
28
32
140-144
25
28
27
30
29
33
145-149
26
29
28
31
30
34
150-154
27
30
29
32
31
35
155-159
28
31
30
33
32
36
160-164
29
32
31
34
33
37
165-169
30
33
32
35
34
37
170-174
31
34
33
36
35
37
175-179
32
35
34
37
36
37
180-184
33
36
35
37
37
37
185-189
34
37
36
37
37
37
190-194
35
37
37
37
37
37
195-199
36
37
37
37
37
37
200-204
37
37
37
37
37
37
205-209
37
37
37
37
37
37
210-214
37
37
37
37
37
37
215-219
37
37
37
37
37
37
220+
37
37
37
37
37
37

For cars registered before 1 January 1998 the car benefit is worked out according to engine size as shown in the table below from 2016/17 onwards:

Engine size
%
up to 1,4000cc
16
1,401-2,000cc
27
Over 2,000cc
37

Employer-provided Vans

Where an employee takes their van home but does not make private use of the vehicle, they are exempt from any tax charge. There is a flat rate benefit in kind of £3,170 for 2016/17, £3,230 for 2017/18 and £3,350 for 2018/19 for any private use. The fuel scale charge for a van with significant private use is a flat £598 for 2016/17, £610 for 2017/18 and £633 for 2018/19. The fuel benefit can be reduced proportionately where it is not available for part of a year.
Finance Act 2015 made changes to the rules regarding “zero emission vans” introducing a charge from 6 April 2015 (up to 5 April 2015 the charge was nil). The charge for 2015/16 was expressed as 20% x the flat rate benefit of £3,150. It was proposed that there would be tapering increases to the percentage applicable to later tax years.
Budget 2016 proposes that the rate of 20% be retained for 2016/17 and 2017/18. However, for 2018/2019 the rate increases to 40%.
The charge for a zero emission van for 2016/17 is 20% x £3,170, for 2017/18 20% x £3,230 and for 2018/19 40% x £3,350.
Where an employer provides an employee or director with use of a van for personal journeys, other than for home to work, a benefit in kind arises. The amount of the benefit is shown in the table below. Where fuel for personal journeys is also provided a separate benefit in kind arises. The amount of this is also shown in the table below.
Year
2016/17
2017/18
2018/19
Van benefit
£3,170
£3,230
£3,350
Van fuel benefit
£598
£610
£633
Where a van produce no CO2 emissions the benefit in kind is reduced to zero. However the reduction is being phased out over several years with effect from 6 April 2015. The effect of this is that the benefit in kind will be charged as a percentage of the rates shown above. The phased charge is shown in the table below.
Tax year
% of van benefit charge
2015/16
20%
2016/17
20%
2017/18
20%
2018/19
40%
2019/20
60%
2020/21
80%
2021/22
90%
2022/23
100%

For more information, we provide a Business Consultation to ensure our clients benefits from tax planning and accounting matters.

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