Tax & Accounting News
Company Cars
22/03/2007
Car benefit
The threshold CO2 emissions rate is frozen at 140 g/km until 5 April 2008. The threshold for 2008/09 will be 135 g/km. The rate of the taxable benefit ranges from 15% to 35% of list price (plus certain accessories) for most petrol or diesel-powered cars.
You can find your taxable percentage of the list price for 2007/08 using the following table:
| CO2 in g/km* | Taxable % | CO2 in g/km* | Taxable % | CO2 in g/km* | Taxable % | |||
| Petrol | Diesel | Petrol | Diesel | Petrol | Diesel | |||
| Less than 145 | 15% | 18% | 175 to 179 | 22% | 25% | 210 to 214 | 29% | 32% |
| 145 to 149 | 16% | 19% | 180 to 184 | 23% | 26% | 215 to 219 | 30% | 33% |
| 150 to 154 | 17% | 20% | 185 to 189 | 24% | 27% | 220 to 224 | 31% | 34% |
| 155 to 159 | 18% | 21% | 190 to 194 | 25% | 28% | 225 to 229 | 32% | 35% |
| 160 to 164 | 19% | 22% | 195 to 199 | 26% | 29% | 230 to 234 | 33% | 35% |
| 165 to 169 | 20% | 23% | 200 to 204 | 27% | 30% | 235 to 239 | 34% | 35% |
| 170 to 174 | 21% | 24% | 205 to 209 | 28% | 31% | 240 and over | 35% | 35% |
| * The exact CO2 figure is rounded down to the nearest 5g/km | ||||||||
Diesel cars are generally subject to a 3% surcharge - with some exceptions, the taxable benefit for a diesel car is 3% higher than for a petrol car with identical CO2 emissions. The 3% surcharge was waived for cars which complied with Euro IV emissions standards, and this applies to 5 April 2006. Thereafter, the waiver applies only to Euro IV compliant cars first registered no later than 31 December 2005.
The discounts for lower emissions vehicles are:
- 2% for bi-fuel lpg and petrol cars manufactured or converted before type approval
- 3% for hybrid electric and petrol cars
- 6% for electric-only cars.
With effect from 2008/09, there will be a reduced taxable percentage rate of 10% for those cars with CO2 emissions of 120 g/km or less.
Car fuel benefit
The multiplier for car fuel benefit has not changed since the current scheme was introduced. It stands at £14,400.
Car and fuel benefit calculation
The amount chargeable to income tax (user) and Class 1A national insurance contributions (employer) for 2007/08 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 2007) and which emits carbon dioxide at a rate of 180 g/km.
| Car benefit | Petrol | Diesel |
| List price | £18,000 | £18,000 |
| Taxable percentage | 23% | 26% |
| Taxable benefit | £4,140 | £4,680 |
| Tax (22% taxpayer) | £911 | £1,030 |
| Tax (40% taxpayer) | £1,656 | £1,872 |
| Employer’s Class 1A NIC | £530 | £599 |
| Fuel benefit | Petrol | Diesel |
| Multiplier | £14,400 | £14,400 |
| Taxable percentage | 23% | 26% |
| Taxable benefit | £3,312 | £3,744 |
| Tax (22% taxpayer) | £729 | £824 |
| Tax (40% taxpayer) | £1,325 | £1,498 |
| Employer’s Class 1A NIC | £424 | £479 |
VAT fuel scale charges for 1 month period
In future businesses must use the following scale charges which are now based on the carbon dioxide emissions. The scale charges will be apply from the start of their next VAT accounting period on or after 1 May 2007.
| CO2 band | VAT fuel scale charge 1 month period £ |
VAT on 1 month charge £ |
VAT exclusive 1 month charge £ |
|---|---|---|---|
| 140 or below | 60.00 | 8.94 | 51.06 |
| 145 | 65.00 | 9.68 | 55.32 |
| 150 | 69.00 | 10.28 | 58.72 |
| 155 | 73.00 | 10.87 | 62.13 |
| 160 | 77.00 | 11.47 | 65.53 |
| 165 | 81.00 | 12.06 | 68.94 |
| 170 | 85.00 | 12.66 | 72.34 |
| 175 | 89.00 | 13.26 | 75.74 |
| 180 | 93.00 | 13.85 | 79.15 |
| 185 | 97.00 | 14.45 | 82.55 |
| 190 | 101.00 | 15.04 | 85.96 |
| 195 | 105.00 | 15.64 | 89.36 |
| 200 | 109.00 | 16.23 | 92.77 |
| 205 | 113.00 | 16.83 | 96.17 |
| 210 | 117.00 | 17.43 | 99.57 |
| 215 | 121.00 | 18.02 | 102.98 |
| 220 | 126.00 | 18.77 | 107.23 |
| 225 | 130.00 | 19.36 | 110.64 |
| 230 | 134.00 | 19.96 | 114.04 |
| 235 | 138.00 | 20.55 | 117.45 |
| 240 or above | 142.00 | 21.15 | 120.85 |
VAT fuel scale charges for 3 month periods
| CO2 band | VAT fuel scale charge 3 month period £ |
VAT on 3 month charge £ |
VAT exclusive 3 month charge £ |
|---|---|---|---|
| 140 or below | 182.00 | 27.11 | 154.89 |
| 145 | 195.00 | 29.04 | 165.96 |
| 150 | 207.00 | 30.83 | 176.17 |
| 155 | 219.00 | 32.62 | 186.38 |
| 160 | 231.00 | 34.40 | 196.60 |
| 165 | 243.00 | 36.19 | 206.81 |
| 170 | 256.00 | 38.13 | 217.87 |
| 175 | 268.00 | 39.91 | 228.09 |
| 180 | 280.00 | 41.70 | 238.30 |
| 185 | 292.00 | 43.49 | 248.51 |
| 190 | 304.00 | 45.28 | 258.72 |
| 195 | 317.00 | 47.21 | 269.79 |
| 200 | 329.00 | 49.00 | 280.00 |
| 205 | 341.00 | 50.79 | 290.21 |
| 210 | 353.00 | 52.57 | 300.43 |
| 215 | 365.00 | 54.36 | 310.64 |
| 220 | 378.00 | 56.30 | 321.70 |
| 225 | 390.00 | 58.09 | 331.91 |
| 230 | 402.00 | 59.87 | 342.13 |
| 235 | 414.00 | 61.66 | 352.34 |
| 240 or above | 426.00 | 63.45 | 362.55 |
VAT fuel scale charges for 12 month periods
| CO2 band | VAT fuel scale charge 12 month period £ |
VAT on 12 month charge £ |
VAT exclusive 12 month charge £ |
|---|---|---|---|
| 140 or below | 730.00 | 108.72 | 621.28 |
| 145 | 780.00 | 116.17 | 663.83 |
| 150 | 830.00 | 123.62 | 706.38 |
| 155 | 880.00 | 131.06 | 748.94 |
| 160 | 925.00 | 137.77 | 787.23 |
| 165 | 975.00 | 145.21 | 829.79 |
| 170 | 1,025.00 | 152.66 | 872.34 |
| 175 | 1,075.00 | 160.11 | 914.89 |
| 180 | 1,120.00 | 166.81 | 953.19 |
| 185 | 1,170.00 | 174.26 | 995.74 |
| 190 | 1,220.00 | 181.70 | 1,038.30 |
| 195 | 1,270.00 | 189.15 | 1,080.85 |
| 200 | 1,315.00 | 195.85 | 1,119.15 |
| 205 | 1,365.00 | 203.30 | 1,161.70 |
| 210 | 1,415.00 | 210.74 | 1,204.26 |
| 215 | 1,465.00 | 218.19 | 1,246.81 |
| 220 | 1,510.00 | 224.89 | 1,285.11 |
| 225 | 1,560.00 | 232.34 | 1,327.66 |
| 230 | 1,610.00 | 239.79 | 1,370.21 |
| 235 | 1,660.00 | 247.23 | 1,412.77 |
| 240 or above | 1,705.00 | 253.94 | 1,451.06 |
VED rates
| Band | CO2 emissions g/km | Petrol | Diesel | Alternative fuel |
| A | 100 and below | £0 | £0 | £0 |
| B | 101 - 120 | £35 | £35 | £15 |
| C | 121 - 150 | £115 | £115 | £95 |
| D | 151 - 165 | £140 | £140 | £120 |
| E | 166 - 185 | £165 | £165 | £145 |
| F | 186 - 225 | £205 | £205 | £190 |
| G* | 226 and above | £300 | £300 | £285 |
| * New cars registered from 23 March 2006 | ||||
21 March 2007 Budget Report
Budget Highlights
Business Taxation
Business Incentives
Company Cars
Company Vans
Mileage Allowances
Value Added Tax
Personal Taxation
National Insurance Contributions
Personal Savings
Capital Taxes
Excise Duties
Stamp Duties
Other Measures Announced
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