Benefit In Kind

Company Vehicle Benefit In Kind

Cars

Company Car Benefit Charge

Do you or are you thinking about providing company cars for your employees.

Questions you may ask:

  • What is the tax treatment for providing company cars for both myself as a company and as a driver?
  • How is the BIK for cars calculated?
  • If there is no personal use, is it still classed as a taxable Benefit-in-Kind?

How does it work?

In simple terms if you provide your employees with company cars and that car is made available for personal use then the car is deemed to be a non-cash benefit by HMRC (similar to other benefits like private medical cover) As such the employee is liable for a tax charge. The tax charge is known as the Benefit-in-Kind (BIK). For further information read on below or if you have more specific questions then let us know.

P11D VALUE - is a form that HMRC requires all employers to complete. It details the cash equivalent values of all benefits and expenses that have been supplied during the tax year.

The P11D value of a car is the start point to calculating company car tax and is calculated per below:

Vehicle List Price (Including VAT)*

+

List Price of any Accessories (Including VAT)**

+

Delivery Charges

-

Any Capital Contributions made by the employee

=

P11D Value

*This value excludes any First Year Registration fee and Vehicle Excise Duty (VED)

**Accessories added at a future date need to be added to the P11D value if they have a cost of £100 or more, ( accessories costing less than £100 are excluded) , also any like for like replacement accessories will not amend the P11D value.

 

The value of the benefit is calculated as follows:

P11D Value

x

CO2 derived Appropriate Taxable Percentage (Per CO2 Table)

=

Benefit-in-Kind

 

Cars Registered before

6 April  2020

Appropriate Taxable Percentage

CO₂ emissions

Electric - Zero emission range

2017/18

2018/19

2019/20

2020/21

2021/22

2022/23

0 g/km

 

9%

13%

16%

0%

1%

2%

1 – 50 g/km

More than 130 Miles

9%

13%

16%

2%

2%

2%

1 – 50 g/km

70 – 129 Miles

9%

13%

16%

5%

5%

5%

1 – 50 g/km

40 – 69 Miles

9%

13%

16%

8%

8%

8%

1 – 50 g/km

30 – 39 Miles

9%

13%

16%

12%

12%

12%

1 – 50 g/km

Less than 30 Miles

9%

13%

16%

14%

14%

14%

51 – 54 g/km

 

13%

16%

19%

15%

15%

15%

55 – 59 g/km

 

13%

16%

19%

16%

16%

16%

60 – 64 g/km

 

13%

16%

19%

17%

17%

17%

65 – 69 g/km

 

13%

16%

19%

18%

18%

18%

70 – 75 g/km

 

13%

16%

19%

19%

19%

19%

76 – 79 g/km

 

17%

19%

22%

20%

20%

20%

80 – 84 g/km

 

17%

19%

22%

21%

21%

21%

85 – 89 g/km

 

17%

19%

22%

22%

22%

22%

90 – 94 g/km

 

17%

19%

22%

23%

23%

23%

95 – 99 g/km

 

18%

20%

23%

24%

24%

24%

100 – 104 g/km

 

19%

21%

24%

25%

25%

25%

105 – 109 g/km

 

20%

22%

25%

26%

26%

26%

110 – 114 g/km

 

21%

23%

26%

27%

27%

27%

115 – 119 g/km

 

22%

24%

27%

28%

28%

28%

120 – 124 g/km

 

23%

25%

28%

29%

29%

29%

125 – 129 g/km

 

24%

26%

29%

30%

30%

30%

130 – 134 g/km

 

25%

27%

30%

31%

31%

31%

135 – 139 g/km

 

26%

28%

31%

32%

32%

32%

140 – 144 g/km

 

27%

29%

32%

33%

33%

33%

145 – 149 g/km

 

28%

30%

33%

34%

34%

34%

150 – 154 g/km

 

29%

31%

34%

35%

35%

35%

155 – 159 g/km

 

30%

32%

35%

36%

36%

36%

160 – 164 g/km

 

31%

33%

36%

37%

37%

37%

165 – 169 g/km

 

32%

34%

37%

37%

37%

37%

170 – 174 g/km

 

33%

35%

37%

37%

37%

37%

175 – 179 g/km

 

34%

36%

37%

37%

37%

37%

180 – 184 g/km

 

35%

37%

37%

37%

37%

37%

185 – 189 g/km

 

36%

37%

37%

37%

37%

37%

190 g/km and above

 

37%

37%

37%

37%

37%

37%

 

Cars Registered before

6 April  2020

Appropriate Taxable Percentage

CO₂ emissions

Electric - Zero emission range

2017/18

2018/19

2019/20

2020/21

2021/22

2022/23

0 g/km

 

9%

13%

16%

0%

1%

2%

1 – 50 g/km

More than 130 Miles

9%

13%

16%

2%

2%

2%

1 – 50 g/km

70 – 129 Miles

9%

13%

16%

5%

5%

5%

1 – 50 g/km

40 – 69 Miles

9%

13%

16%

8%

8%

8%

1 – 50 g/km

30 – 39 Miles

9%

13%

16%

12%

12%

12%

1 – 50 g/km

Less than 30 Miles

9%

13%

16%

14%

14%

14%

51 – 54 g/km

 

13%

16%

19%

15%

15%

15%

55 – 59 g/km

 

13%

16%

19%

16%

16%

16%

60 – 64 g/km

 

13%

16%

19%

17%

17%

17%

65 – 69 g/km

 

13%

16%

19%

18%

18%

18%

70 – 75 g/km

 

13%

16%

19%

19%

19%

19%

76 – 79 g/km

 

17%

19%

22%

20%

20%

20%

80 – 84 g/km

 

17%

19%

22%

21%

21%

21%

85 – 89 g/km

 

17%

19%

22%

22%

22%

22%

90 – 94 g/km

 

17%

19%

22%

23%

23%

23%

95 – 99 g/km

 

18%

20%

23%

24%

24%

24%

100 – 104 g/km

 

19%

21%

24%

25%

25%

25%

105 – 109 g/km

 

20%

22%

25%

26%

26%

26%

110 – 114 g/km

 

21%

23%

26%

27%

27%

27%

115 – 119 g/km

 

22%

24%

27%

28%

28%

28%

120 – 124 g/km

 

23%

25%

28%

29%

29%

29%

125 – 129 g/km

 

24%

26%

29%

30%

30%

30%

130 – 134 g/km

 

25%

27%

30%

31%

31%

31%

135 – 139 g/km

 

26%

28%

31%

32%

32%

32%

140 – 144 g/km

 

27%

29%

32%

33%

33%

33%

145 – 149 g/km

 

28%

30%

33%

34%

34%

34%

150 – 154 g/km

 

29%

31%

34%

35%

35%

35%

155 – 159 g/km

 

30%

32%

35%

36%

36%

36%

160 – 164 g/km

 

31%

33%

36%

37%

37%

37%

165 – 169 g/km

 

32%

34%

37%

37%

37%

37%

170 – 174 g/km

 

33%

35%

37%

37%

37%

37%

175 – 179 g/km

 

34%

36%

37%

37%

37%

37%

180 – 184 g/km

 

35%

37%

37%

37%

37%

37%

185 – 189 g/km

 

36%

37%

37%

37%

37%

37%

190 g/km and above

 

37%

37%

37%

37%

37%

37%

Diesel Supplement

If a car runs solely on diesel a 4% supplement (previously 3%) is added to the appropriate taxable percentage, subject to a limit of 37%. The supplement is not charged if the vehicle meets the Real Driving Emissions Step 2 (RDE 2) standard.

The 3% diesel supplement will be applied until April 2021

The BIK value is then adjusted for any of the following:

  1. Part year period i.e. When the car was not made available until part way through a tax year or when a car ceased to be made available part way through a tax year.

  2. Period when the car was unavailable (minimum period of 30 consecutive days or more).

  3. Payments made by the employee for private use of the car.

  4. Periods when the car has had shared use

The final adjusted BIK value is then multiplied by the employees marginal tax rate to determine the tax payable.

For employers, the BIK value is used to calculate the Class 1A National Insurance contributions, this is the amount the employer has to pay on the benefit provided to the employee.

The information provided is based on existing and proposed legislation as at November 2017 (2017 Autumn Budget). Whilst every effort has been made to ensure that information given is accurate and not misleading, this information is intended to provide a quick reference to the current tax regulations relating to company vehicles and how they impact employers and employees. The content has been provided for informational purposes only and should not be relied on as a substitute for professional advice. No responsibility can be accepted by LetsTalkFleet Ltd for any loss or liability occasioned by any person acting on or refraining from action as a result of viewing this information.