Tax and the company car pt 2

Tax free benefits

  • Car Parking

The provision of a car parking space at or near the employee's place of work is not an assessable benefit.

  • Pool Cars

There is no tax for using a pool car. This is one where private use is merely incidental to the business use, and it is not normally used by one employee to the exclusion of all others.

Please note: A pool car must not normally be kept overnight at or near an employee's home.

Business use of an employee's own car

It is quite normal practice for employees to be reimbursed at a reasonable mileage rate for business use of their own cars.

A statutory system of tax and national insurance free mileage rates applies for business journeys in employees' own vehicles, as follows:

Cars and vans
On the first 10,000 miles in the tax year 45p per mile
On each additional mile above this 25p per mile
Motor cycles 24p per mile
Bicycles 20p per mile

It is no longer possible to make a claim for tax relief based on actual receipted bills, nor claim capital allowances or interest on loans related to car purchases.

Note that the lower rate for more than 10,000 business miles only applies to income tax. The national insurance rate remains at 45p for any number of miles.

Unless the employee is reimbursed at a rate higher than the statutory mileage rate, the payments do not need to be reported on a P11D.

Passenger payments

When an employee travelling on business carries fellow employees as passengers he may be reimbursed a further 5p per passenger tax free provided the journey is a business journey in respect of the passengers. No claim can be made if the employer does not make passenger payments.

Company vans

The taxable benefit for the unrestricted use of company vans is £3,230 (with no reduction for older vans) plus a further £610 of taxable benefit if fuel is provided by the employer for private travel. Electric vans are currently taxed at 20% of the van scale rate (i.e. £646).

The tax payable on the use of a company van ranges from £129.20 up to £1,728 p.a., and the employer's Class1A NIC payable ranges from £89.15 to £529.92 p.a.

Use our calculator to check your van benefit

Tax saving check list

  • Keep adequate records of business mileage.
  • Always check your tax code to see that the correct benefit is being applied.
  • If you have low private mileage, you may be better off if you pay for all your own private fuel.
  • If you have high business mileage, it may be better to use your own car and claim "mileage" from your employer.
  • Encourage your employer to apply for a P11D dispensation.

Company cars - beyond 2017

  • The taxable benefits tables have also been published for the tax years, 2018/19 to 2019/20.
  • These increase the percentages for each band of emissions by 2% and 3% respectively.

 

CO2 emissions (g/km)* Petrol Diesel
0 to 50 9% 10%
51 to 75 13% 14%
76 to 94 17% 18%
95 to 99 18% 19%
100 to 104 19% 20%
105 to 109 20% 21%
110 to 114 21% 22%
115 to 119 22% 23%
120 to 124 23% 24%
125 to 129 24% 25%
130 to 134 25% 26%
135 to 139 26% 27%
140 to 144 27% 28%
145 to 149 28% 29%
150 to 154 29% 30%
155 to 159 30% 31%
160 to 164 31% 32%
165 to 169 32% 33%
170 to 174 33% 34%
175 to 179 34% 35%
180 to 184 35% 36%
185 to 189 36% 37%
190 and over 37% 37%

*The exact CO2 figure is rounded down to the nearest 5g/km.