Company car tax calculations

Since April 2002, company car tax has been based not on mileage but on your car’s carbon dioxide emissions. The higher the car’s emissions, the higher its tax liability (usually between 15% and 35%). So, how do you work out what a company car costs you? The easiest way is to use the company car tax calculator on whatcar.com. For those of you who want to crunch the numbers yourself, here are the details.

  • Find out your car’s carbon dioxide emissions – stated in grams per kilometre (g/km) – by looking on whatcar.com or at the official website www.vcacarfueldata.org.uk (opens in new window).
  • Use the carbon dioxide look-up table to see what tax liability percentage this equates to (see table). Petrol cars are straightforward but, if you have a diesel, you’ll need to know whether it complies with Euro III or the new Euro IV emissions regulations – the latter means you don’t have to pay the 3% diesel surcharge if registered before December 2005.
  • Alternative-fuel cars have lower tax liability than respective petrol cars. For electric cars, deduct 6%. Petrol-electric hybrids incur 2% less tax, plus an extra 1% for every 20g/km of carbon dioxide emissions below 140g/km. LPG and CNG bi-fuel cars offer a 1% saving with a further 1% for every 20g/km of carbon dioxide emissions below 140g/km. Got all that?
  • Work out your car’s P11D price (the list price including any options, but excluding the cost of first registration and road tax).
  • Multiply your tax liability percentage by the car’s P11D price.
  • Now, multiply this by your rate of income tax: 22% (basic) or 40% (higher rate).
  • The resultant figure is your company car tax bill for 2005-6.
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