Company Car Taxation

Back in April 2002, there was a fundamental change to company car tax, in order to help the environment. The government is now prepared to reward those who drive cleaner more fuel-efficient cars, by linking tax charges to a car's exhaust emissions, in particular its carbon dioxide emissions.

With this new system in place, it is possible to reduce your Benefit-in-Kind tax bills, simply by choosing cars that emit less CO2.

The car benefit charge will be the car's list price (including VAT, options and accessories fitted, delivery to retailer and number plates, but excluding Vehicle Excise Duty and new vehicle first registration fee) multiplied by the percentage charge for the CO2 emissions band in which the car falls (click on the link for details). Multiply this figure by your personal income tax rate (20% for Basic Rate, 40% for Higher Rate for 2009-10 tax year) to calculate your annual Benefit-in-Kind tax liability.

Benefit-in-Kind company car tax guide (PDF, 38KB)