Benefit In Kind
Company Car Benefit Charge & Company Car Tax Bands
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 for your Company Car Tax Calculator and is summarised :
Cars Registered from 6 April 2020 | Appropriate Taxable %age | ||||||||||
Historic | Current | Future | Proposed | ||||||||
CO₂ emissions (g/km) | Electric - Zero Emission Range | 2020 -21 | 2021 -22 | 2022 -23 | 2023 -24 | 2024 -25 | 2025 -26 | 2026 -27 | 2027 -28 | 2028 -29 | 2029 -30 |
0 | Not Applicable | 0% | 1% | 2% | 2% | 2% | 3% | 4% | 5% | 7% | 9% |
1-50 | Over 130 Miles | 0% | 1% | 2% | 2% | 2% | 3% | 4% | 5% | 18% | 19% |
1-50 | 70 to 129 Miles | 3% | 4% | 5% | 5% | 5% | 6% | 7% | 8% | ||
1-50 | 40 to 69 Miles | 6% | 7% | 8% | 8% | 8% | 9% | 10% | 11% | ||
1-50 | 30 to 39 Miles | 10% | 11% | 12% | 12% | 12% | 13% | 14% | 15% | ||
1-50 | Under 30 Miles | 12% | 13% | 14% | 14% | 14% | 15% | 16% | 17% | ||
51 - 54 |
| 13% | 14% | 15% | 15% | 15% | 16% | 17% | 18% | 19% | 20% |
55 - 59 |
| 14% | 15% | 16% | 16% | 16% | 17% | 18% | 19% | 20% | 21% |
60 - 64 |
| 15% | 16% | 17% | 17% | 17% | 18% | 19% | 20% | 21% | 22% |
65 - 69 |
| 16% | 17% | 18% | 18% | 18% | 19% | 20% | 21% | 22% | 23% |
70 - 74 |
| 17% | 18% | 19% | 19% | 19% | 20% | 21% | 22% | 23% | 24% |
75 - 79 |
| 18% | 19% | 20% | 20% | 20% | 21% | 22% | 23% | 24% | 25% |
80 - 84 |
| 19% | 20% | 21% | 21% | 21% | 22% | 23% | 24% | 25% | 26% |
85 - 89 |
| 20% | 21% | 22% | 22% | 22% | 23% | 24% | 25% | 26% | 27% |
90 - 94 |
| 21% | 22% | 23% | 23% | 23% | 24% | 25% | 26% | 27% | 28% |
95 - 99 |
| 22% | 23% | 24% | 24% | 24% | 25% | 26% | 27% | 28% | 29% |
100 - 104 |
| 23% | 24% | 25% | 25% | 25% | 26% | 27% | 28% | 29% | 30% |
105 - 109 |
| 24% | 25% | 26% | 26% | 26% | 27% | 28% | 29% | 30% | 31% |
110 - 114 |
| 25% | 26% | 27% | 27% | 27% | 28% | 29% | 30% | 31% | 32% |
115 - 119 |
| 26% | 27% | 28% | 28% | 28% | 29% | 30% | 31% | 32% | 33% |
120 - 124 |
| 27% | 28% | 29% | 29% | 29% | 30% | 31% | 32% | 33% | 34% |
125 - 129 |
| 28% | 29% | 30% | 30% | 30% | 31% | 32% | 33% | 34% | 35% |
130 - 134 |
| 29% | 30% | 31% | 31% | 31% | 32% | 33% | 34% | 35% | 36% |
135 - 139 |
| 30% | 31% | 32% | 32% | 32% | 33% | 34% | 35% | 36% | 37% |
140 - 144 |
| 31% | 32% | 33% | 33% | 33% | 34% | 35% | 36% | 37% | 38% |
145 - 149 |
| 32% | 33% | 34% | 34% | 34% | 35% | 36% | 37% | 38% | 39% |
150- 154 |
| 33% | 34% | 35% | 35% | 35% | 36% | 37% | 37% | 38% | 39% |
155 - 159 |
| 34% | 35% | 36% | 36% | 36% | 37% | 37% | 37% | 38% | 39% |
160 - 164 |
| 35% | 36% | 37% | 37% | 37% | 37% | 37% | 37% | 38% | 39% |
165 - 169 |
| 36% | 37% | 37% | 37% | 37% | 37% | 37% | 37% | 38% | 39% |
over 170 |
| 37% | 37% | 37% | 37% | 37% | 37% | 37% | 37% | 38% | 39% |
Diesel Supplement
If a car runs solely on diesel a 4% supplement 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.
New European Driving Cycle (NEDC) test procedure CO2 values will be used for vehicles registered before 6 April 2020
The BIK value is then adjusted for any of the following:
- 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.
- Period when the car was unavailable (minimum period of 30 consecutive days or more).
- Payments made by the employee for private use of the car.
- 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.
LetsTalkFleet can provide independent impartial advice on car and van benefit in kind for your business so please get in touch with any specific enquiries you have, we are available on 0330 056 3335 or via email contact@letstalkfleet.co.uk .
The information provided is based on existing and proposed legislation as at November 2024 (30th October 2024 UK Government Autumn Statement). 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.
Company Van Benefit Charge
If you provide or are thinking about providing company vans to employees the rules and tax rates are different to cars.
How does it work?
In simple terms if you provide your employees with company vans and that van is made available for non incidental personal use then the van 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.
The Van BIK tax charge is a flat rate benefit in kind charge which changes each year:
| Appropriate Taxable %age | |||||||||
Historic | Current | Future | ||||||||
Tax year | 2020 -21 | 2021 -22 | 2022 -23 | 2023 -24 | 2024 -25 | 2025 -26 | 2026 -27 | 2027 -28 | 2028 -29 | 2029 -30 |
Van Benefit | £3,490 | £3,500 | £3,600 | £3,960 | £3,960 | £4,020 | Announced in Autumn Statement in preceding year | |||
Van Fuel Benefit | £666 | £669 | £688 | £757 | £757 | £769 | ||||
LetsTalkFleet can provide independent impartial advice on car and van benefit in kind for your business so please get in touch with any specific enquiries you have, we are available on 0330 056 3335 or via email contact@letstalkfleet.co.uk .