AITI Chartered Tax Adviser

How is a company car taxed?

You are taxed on “notional pay” based on the cash equivalent of the benefit of use of a company car. This is calculated as a percentage of the car’s original market value (OMV), inclusive of duty and VAT, depending on your annual business travel and the car’s CO2 emissions category:
Category A: 0g/km up to and including 120g/km,
Category B: More than 120g/km up to and including 140g/km,
Category C: More than 140g/km up to and including 155g/km,
Category D: More than 155g/km up to and including 170g/km,
Category E: More than 170g/km up to and including 190g/km,
Category F: More than 190g/km up to and including 225g/km,
Category G: More than 225g/km.

Where the annual business travel is:
(a) 0 to 24,000 km, the BIK is:
(i) 40% for category F, G,
(ii) 35% for categories D, E, and
(iii) 30% for categories A, B, C,
(b) 24,000 to 32,000 km, the BIK is:
(i) 32% for category F, G,
(ii) 28% for categories D, E, and
(iii) 24% for categories A, B, C,
(c) 32,000 to 40,000 km, the BIK is:
(i) 24% for category F, G,
(ii) 21% for categories D, E, and
(iii) 18% for categories A, B, C,
(d) 40,000 to 48,000 km, the BIK is:
(i) 16% for category F, G,
(ii) 14% for categories D, E, and
(iii) 12% for categories A, B, C,
(e) 48,000 or more km, the BIK is:
(i) 8% for category F, G,
(ii) 7% for categories D, E, and
(iii) 6% for categories A, B, C.

The BIK figure can be further reduced by the amount required to be made good, and actually made good, by you directly to your employer in respect of the car’s running costs.

Where the company car is not available for the full year, you can construct your own customised business mileage table.

BIK does not apply to “pool cars”, i.e., cars which are available to, and used by, more than one employee, provided the car is not kept overnight at or near your home (except where your home happens to be near your employer’s premises).