Personal Cost on Car Benefits
The taxable benefit from the private use of a passenger car is the car’s list price when new multiplied by a percentage calculated according to the car’s carbon dioxide emissions and, if applicable, electric range.
The percentage rates can be found here.
As an example, a car with a list price of £30,000 and a CO2 percentage of 20% has a taxable value of £6,000. An employee in the 20% marginal income tax band therefore pays £1,200 extra tax per year, and both the company and the employee will have to pay Social Costs on this.
Tax on fuel provided for private use
A taxable Benefit in Kind for private use of company paid for fuel will be made on any employee provided with a company car unless the company can prove that no fuel was provided for private use at any time. The tax authorities have helpfully provided clear guidance on what procedures and evidence they will accept as providing this proof. Failure to follow these procedures will result in a tax charge for the whole tax year.
All travel from home to work is considered as private use in the UK.
The amount of the taxable benefit for private fuel is calculated by applying the percentage for the car from the link above to the taxable benefit value of £24,100. This can change each year.
Employer’s Social Costs are also payable on the value of all taxable benefits.
Tax Free Allowances
Fuel allowance
For the business use of a car provided by the company, the amount payable for each English mile (1.6 km) can be found here.
Business use
For the business use of a privately owned car (mileage allowance), the amount payable for each English mile (1.6 km) can be found here.
If these fuel or mileage allowances are not exceeded, then there is no tax or Social Cost liability. If any amount more than the Tax Free Allowances is paid, then the whole of the amount becomes taxable on the employee and full Social Costs must also be paid.
