You pay company car tax on a percentage of the P11D value of your car.
The P11D value is the manufacturer’s new price, plus VAT, delivery, number plates and any optional extras.
The percentage of the P11D value you pay tax on is decided by the CO2 emissions of your car and fuel type. To find your emissions figure, you can either look at the car's vehicle registration certificate, or use an official guide, available from the Vehicle Certification Agency (www.vca.gov.uk).
P11D percentages start at 10% for a petrol car with C02 emissions of 120 g/km and rise to 35% for 235 g/km. (see table).
| Tax Bands 2009/2010 | ||||||
|
2009/10
|
2010/11
|
2011/12
|
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|
CO2
|
Petrol
|
Diesel
|
Petrol
|
Diesel
|
Petrol
|
Diesel
|
| 120 and below | 10% | 13% | 10% | 13% | 15% | 18% |
| 125 | 15% | 18% | 15% | 18% | 15% | 18% |
| 130 | 15% | 18% | 15% | 18% | 16% | 19% |
| 135 | 15% | 18% | 16% | 19% | 17% | 20% |
| 140 | 16% | 19% | 17% | 20% | 18% | 21% |
| 145 | 17% | 20% | 18% | 21% | 19% | 22% |
| 150 | 18% | 21% | 19% | 22% | 20% | 23% |
| 155 | 19% | 22% | 20% | 23% | 21% | 24% |
| 160 | 20% | 23% | 21% | 24% | 22% | 25% |
| 165 | 21% | 24% | 22% | 25% | 23% | 26% |
| 170 | 22% | 25% | 23% | 26% | 24% | 27% |
| 175 | 23% | 26% | 24% | 27% | 25% | 28% |
| 180 | 24% | 27% | 25% | 28% | 26% | 29% |
| 185 | 25% | 28% | 26% | 29% | 27% | 30% |
| 190 | 26% | 29% | 27% | 30% | 28% | 31% |
| 195 | 27% | 30% | 28% | 31% | 29% | 32% |
| 200 | 28% | 31% | 29% | 32% | 30% | 33% |
| 205 | 29% | 32% | 30% | 33% | 31% | 34% |
| 210 | 30% | 33% | 31% | 34% | 32% | 35% |
| 215 | 31% | 34% | 32% | 35% | 33% | 35% |
| 220 | 32% | 35% | 33% | 35% | 34% | 35% |
| 225 | 33% | 35% | 34% | 35% | 35% | 35% |
| 230 | 34% | 35% | 35% | 35% | 35% | 35% |
| 235 | 35% | 35% | 35% | 35% | 35% | 35% |
Once you have worked out your P11D value, discovered what percentage of it you’ll pay tax on, and calculated the figure that amounts to, bear in mind that you pay tax on it at your higher rate (either 20% or 40%). This is normally deducted every month from your salary.
Diesel cars and your tax bill
Diesel engines produce less CO2, so your actual company car tax bill should be smaller than the equivialnt size petrol engine. But other factors may offset this and make diesels just as expensive overall.
For a start, diesel models usually cost more than the petrol equivalent, so you have to make sure the higher P11D price doesn't outweigh any advantage from a lower tax banding.
Diesel fuel costs more at the pumps than petrol too, so you need to meet the predicted fuel economy figures from the manufacturer to really benefit.
And finally, diesel company cars have a 3% surcharge added to their tax band, bcause of concerns about particulates and other pollutants that come out from diesel exhausts.
Alternative fuels and your tax bill
There is a 3% discount for hybrids (petrol/electric cars), a 2% discount for LPG and a 6% discount for electric-only cars.
The 'free' fuel benefit
You may face a further tax if your employer provides 'free' fuel for private motoring. This could be because you use a company fuel card, for example, and don’t repay the private usage element, or because your employer pays for travel between home and work.
The taxable benefit is now based simply on the Government derived figure of £14,400, multiplied by the same percentage derived from the CO2 table.
To find out what your company car tax bill will be, go to the company car tax calculator.