For many years now company car tax has been directly linked to the amount of CO2 emissions the car you choose produces and this year is no different. In fact, the bandings are getting tighter.
The rates are going up a percentage across the board, except for cars that emit less than 75g/km, which means you will more than likely be paying more in company car tax starting from April 6.
Below shows the CO2 emissions and the Benefit-in-Kind (BIK) tax band that will be applied. Remember, you need to add a further three percent if you drive a diesel car up to a maximum of 35 percent. This three percent diesel levy is to be scrapped in 2016.
|
CO2 emissions |
BIK liability (percent) |
|
0g/km |
0 |
|
1-75g/km |
5 |
|
76-94g/km |
11 |
|
95-99g/km |
12 |
|
100-104g/km |
13 |
|
105-109g/km |
14 |
|
110-114g/km |
15 |
|
115-119g/km |
16 |
|
120-124g/km |
17 |
|
125-129g/km |
18 |
|
130-134g/km |
19 |
|
135-139g/km |
20 |
|
140-144g/km |
21 |
|
145-149g/km |
22 |
|
150/154g/km |
23 |
|
155-159g/km |
24 |
|
160-164g/km |
25 |
|
165-169g/km |
26 |
|
170-174g/km |
27 |
|
175-179g/km |
28 |
|
180-184g/km |
29 |
|
185-189g/km |
30 |
|
190-194g/km |
31 |
|
195-199g/km |
32 |
|
200-204g/km |
33 |
|
205-209g/km |
34 |
|
210g/km and above |
35 |
How to calculate company car tax
To calculate company car tax you need the following information: the car’s P11D value, the amount of CO2 emissions the car produces and the BIK tax band it falls in to (you will be able to find this out by using the table above).
Then you divide the P11D price by the BIK tax percentage and then divide again by the amount of tax you pay; 20 percent, 40 percent or 45 percent. This will give you an annual company car tax cost for your car which you can then divide by 12 to get your monthly cost.
Let’s look at an example.
The Volkswagen Golf 1.6TDI BlueMotion five-door has a P11D value of £21,215 and CO2 emissions of 85g/km. Using the table above we can see that it falls within an 11 percent BIK tax band. This Golf is also a diesel car so we need to add a further three percent, making 14 percent.
So if we divide the P11D price by the tax banding you get £2970.10. If you are a 20 percent tax payer your annual cost will be 20 percent of that value, so £594.04. This gives you your monthly tax bill of £49.50.
Remember – you can also use the Parkers Company Car Tax Calculator.
Forward thinking
BIK tax bands are getting tighter and will continue to go up over the next few years.
Although there has been only a small increase this year, 2015 will see a more substantial change in company car tax with an increase of two percent and the introduction of two new bands; 0-50g/km and 51-75g/km meaning electric and hybrid cars will also be subject to tax.
So it is worth taking some time to consider a greener alternative as your next company car to try and keep your tax bill as low as possible for the years to come.
Low-tax company car choices
The good news is that car manufacturers are developing cars with lower CO2 emissions all the time and there is a wide selection of company cars out now that have emissions below 100g/km.
Take a look at our top picks here.
