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Car Benefit in Kind Tax Calculation

This system changed on 6th April 2002. The previous system was based on a mileage system. Responding to the environmental concerns about the ozone layer, and global warming, governments worldwide committed to reduce the output of greenhouse gases. This includes reducing Co2 emissions. The government began this process by providing a financial incentive to switch to cleaner cars by lowering vehicle excise duty on low emission cars.

The charge for benefit in kind taxation is based on graduated percentages based on Co2 emissions starting from 15% to 35% of the cars P11d price (emissions bands are in increments of 5g/km). Diesel cars have a flat 3% penalty which needs to be added onto the percentage relating to the co2 emissions.

The calculation is as follows to find the monthly cost:-

% relating to the Co2 emissions x P11d value x 22% or 40% personal tax liability 12 months

Benefit in Kind Co2 bands by Tax years

Benefit in Kind Co2 bands

Company car and car fuel benefit calculator

Follow this link to make a calculation

Or click on the links below:-

www.hmrc.gov.uk/calcs/cars.htm

www.whatcar.co.uk/company-car-tax.aspx

www.theaa.com/allaboutcars/companycartax/cartax_input.jsp?page=cartax

Points to Remember:-

1. Always check the Co2 emissions and P11d value, to make sure you are happy with the predicted benefit in kind taxation on the vehicle before you enter into any financial agreement.

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