The company car continues to be an important part of the remuneration package for many employees despite the increases in the taxable benefit rates over the last few years. Employees and directors pay tax on the provision of the car and on the provision of fuel by employers for private mileage. Employers also pay Class 1A NICs at 12.8% on the same amount. This NIC charge is payable by the 19 July following the end of the tax year.The amount on which tax and Class 1A NICs is paid in respect of a company car depends on a number of factors. Essentially, the amount charged is calculated by multiplying the list price of the car, including most accessories, by a percentage. The percentage is set by reference to the rate at which the car emits carbon dioxide, according to officially determined rates.
Company car tax rates The discounts for lower emissions vehicles are: 2% for bi-fuel lpg and petrol cars manufactured or converted before type approval 2% for cars able to run on E85 fuel (type G cars) 3% for hybrid electric and petrol cars 6% for electric-only cars. Car fuel benefit The multiplier for car fuel benefit has increased to £16,900. Car and fuel benefit calculation The amount chargeable to income tax (user) and Class 1A national insurance contributions (employer) for 2008/09 is calculated by multiplying list price (car benefit) or the fuel multiplier (fuel benefit) by a percentage based on the rate at which the car emits carbon dioxide (CO2 in g/km) (see table above). Take a car with a list price of £18,000 when it was first registered (say 31 March 2008) and which emits carbon dioxide at a rate of 176 g/km.
| Car benefit | Petrol | Diesel |
| List price | £18,000 | £18,000 |
| Taxable percentage | 23% | 26% |
| Taxable benefit | £4,140 | £4,680 |
| Tax (20% taxpayer) | £828 | £936 |
| Tax (40% taxpayer) | £1,656 | £1,872 |
| Employer’s Class 1A NIC | £530 | £599 |
| Fuel benefit | ||
| Multiplier | £16,900 | £16,900 |
| Taxable percentage | 23% | 26% |
| Taxable benefit | £3,887 | £4,394 |
| Tax (20% taxpayer) | £777.40 | £878.80 |
| Tax (40% taxpayer) | £1,554.80 | £1,757.60 |
| Employer’s Class 1A NIC | £497.54 | £562.43 |
VAT fuel scale charges
Fuel scale charges for VAT for use from 1 May 2009
VAT fuel scale charges for 1 month period
VAT fuel scale charges for 3 month periods
VAT fuel scale charges for 12 month periods
| 1 Month | |
| CO2 band g/km | VAT fuel scale charge £ |
| 120 or less | 42.00 |
| 125 | 63.00 |
| 130 | 63.00 |
| 135 | 63.00 |
| 140 | 67.00 |
| 145 | 71.00 |
| 150 | 75.00 |
| 155 | 79.00 |
| 160 | 83.00 |
| 165 | 88.00 |
| 170 | 92.00 |
| 175 | 96.00 |
| 180 | 100.00 |
| 185 | 104.00 |
| 190 | 109.00 |
| 195 | 113.00 |
| 200 | 117.00 |
| 205 | 121.00 |
| 210 | 126.00 |
| 215 | 130.00 |
| 220 | 134.00 |
| 225 | 138.00 |
| 230 | 142.00 |
| 235 or more | 147.00 |
| 3 Month | |
| CO2 band g/km | VAT fuel scale charge £ |
| 120 or less | 126.00 |
| 125 | 189.00 |
| 130 | 189.00 |
| 135 | 189.00 |
| 140 | 201.00 |
| 145 | 214.00 |
| 150 | 226.00 |
| 155 | 239.00 |
| 160 | 251.00 |
| 165 | 264.00 |
| 170 | 276.00 |
| 175 | 289.00 |
| 180 | 302.00 |
| 185 | 314.00 |
| 190 | 327.00 |
| 195 | 339.00 |
| 200 | 352.00 |
| 205 | 365.00 |
| 210 | 378.00 |
| 215 | 390.00 |
| 220 | 403.00 |
| 225 | 416.00 |
| 230 | 428.00 |
| 235 or more | 441.00 |
| 12 Month | |
| CO2 band g/km | VAT fuel scale charge £ |
| 120 or less | 505.00 |
| 125 | 755.00 |
| 130 | 755.00 |
| 135 | 755.00 |
| 140 | 805.00 |
| 145 | 855.00 |
| 150 | 905.00 |
| 155 | 960.00 |
| 160 | 1,010.00 |
| 165 | 1,060.00 |
| 170 | 1,110.00 |
| 175 | 1,160.00 |
| 180 | 1,210.00 |
| 185 | 1,260.00 |
| 190 | 1,310.00 |
| 195 | 1,360.00 |
| 200 | 1,410.00 |
| 205 | 1,465.00 |
| 210 | 1,515.00 |
| 215 | 1,565.00 |
| 220 | 1,615.00 |
| 225 | 1,665.00 |
| 230 | 1,715.00 |
| 235 or more | 1,765.00 |
