Chartered Accountants of Poynton, Cheshire

The taxable benefit is calculated as a percentage of the car's UK list price. The calculation begins with the car's C02 emissions in grams per kilometre. Then deduct 135 and divide this result by 5. Round down (4.9 = 4) and then add 15 (petrol) or 18 (diesel). The result is the taxable percentage.

Special rules apply to some environmentally-friendly cars

For cars first registered before 1 January 1998 use the following:

Up to 1400cc                               15%

1401-2000 cc                               22%

Over 2000 cc                               32%

• Chargeable on employees earning £8,500 or over (including benefits) and directors
• The list price relates to the day before first registration and includes accessories. The price is subject to an upper limit of £80,000
• The list price is reduced by the employee's capital contribution when the car is first made available, subject to a maximum deduct'on of £5,000
• Special rules apply to cars at least 15 years old with a market value of £15,000 or more
• Van, no benefit if restricted private use condition met; otherwise van benefit £3,000, fuel £500
• Payments by employees for private use may reduce the above benefits.

HM Revenue & Customs (HMRC) Mileage Rates

Employees using their own car for business: approved rates are 40p per mile for the first 10,000 miles and 25p thereafter. Income tax and NICs may be due on higher rates and tax relief may be due on lower rates.

Company cars: from time to time HMRC publish advisory fuel rates which apply where employees are reimbursed for business travel or are required to repay the cost of fuel for private travel.

Company Car Fuel Benefit: Where the cost of all fuel for private use is borne by the employee, the fuel benefit is nil. Otherwise, the taxable benefit is calculated as the car benefit percentage (see above) of £16,900. VAT is payable by the business by reference to the CO, emissions (rounded down to next multiple of 5) as follows:

VAT on scale charge for quarters commencing on or after 1 May 2008

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