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Vehicle Benefits

Chargeable on employees earning £8,500 or over (including benefits), and directors.

Car Benefit

The taxable benefit is calculated as a percentage of the list price of the car, on the day before it was first registered, plus certain accessories. This percentage depends upon the rate at which the car emits carbon dioxide (CO2), and the fuel type.

From April 2015, the five year exemption for zero carbon and the lower rate for ultra-low carbon emission cars will come to an end. Two new bands will be introduced for ultra-low emission vehicles (ULEVs). These will be set at 0-50 g/km and 51-75 g/km. The appropriate percentages for the remaining bands will increase by 2% for cars emitting more than 75 g/km, to a new maximum of 37%.

You can find the appropriate percentage for 2015/16 using the following table:

CO2 emissions
(g/km)
Appropriate percentage
Petrol % Diesel %
0-50 5 8
51-75 9 12
76-94 13 16
95-99 14 17
100-104 15 18
105-109 16 19
110-114 17 20
115-119 18 21
120-124 19 22
125-129 20 23
130-134 21 24
135-139 22 25
140-144 23 26
145-149 24 27
150-154 25 28
155-159 26 29
160-164 27 30
165-169 28 31
170-174 29 32
175-179 30 33
180-184 31 34
185-189 32 35
190-194 33 36
195-199 34


37
200-204 35
205-209 36
210 or more 37

How to find out how much CO2 your company car emits – see:

  • the car’s V5 registration document
  • your dealer
  • the data pages of car magazines (current models)

Reliable emissions data is not widely available for cars registered before 1 January 1998. For them, the following taxable percentages apply, regardless of fuel type:

Engine capacity Taxable %
Up to 1400cc 15%
1401 - 2000cc 22%
Over 2000cc 32%

Car fuel benefit

The taxable car fuel benefit, for 2015/16, is calculated by applying the CO2 based car benefit percentage to the car fuel benefit charge multiplier of £22,100.

If the employee pays for the full cost of all fuel for private journeys (usually including home to work) there will be no car fuel benefit. In all other cases the full tax charge will be due.

Fuel-Only Mileage Rates
HMRC advisory mileage rates at the time of the Budget for employee private mileage reimbursement or employer reimbursement of business mileage in company cars are:
Engine Size Petrol LPG
1400cc or less 11p 8p
1401cc - 2000cc 13p 10p
Over 2000cc 20p 14p
Engine Size Diesel  
1600cc or less 9p  
1601cc - 2000cc 11p  
Over 2000cc 14p  

Example: A company car driver has a car which, on the day before it was first registered, had a list price of £21,000. It runs on petrol, and emits 177 g/km of CO2.

If we assume the driver pays tax at 40%, the 2015/16 tax bill on the car is: £21,000 x 30% x 40% = £2,520

If the employer provides any fuel used for private journeys and is not reimbursed for the cost, the 2015/16 tax bill for the fuel is: £22,100 x 30% x 40% = £2,652.

Company vans

The taxable benefit for the unrestricted use of company vans is £3,150 plus a further £594 of taxable benefit if fuel is provided by the employer for private travel.

Van and fuel charge Van Fuel Total
Tax (20% taxpayer) £630 £118.80 £748.80
Tax (40% taxpayer) £1,260 £237.60 £1,497.60
Tax (45% taxpayer) £1,417.50 £267.30 £1,684.80
Employer's class 1A NICs £434.70 £81.97 £516.67

Van drivers can avoid a benefit charge if they agree not to use the van for personal journeys. Driving to and from work is acceptable so long as there is a reasonable amount of business use.

The flat rate of £3,150 is reduced by 80% to £630 for vans which cannot produce C02 engine emissions under any circumstances when driven. There is no fuel benefit for such vans.

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