Chapter 17 Company Car and fuel benefits Flashcards
car benefit
Company car – to work out the taxable benefit of the car you start with the list price and add on any accessories provided with the car. Then you deduct any capital contributions made to the employer by the employee. Regarding capital contributions the maximum deduction from the list price is £5,000. You then tax a percentage of the list price depending on the Co2 emissions. The maximum percentage is 37%. The benefit is reduced if the car has not been available for the whole of the tax year, apportionment is done on a monthly basis. If a car is being repaired or serviced or having a MOT, a non-availability deduction can be made if the car is off the road for a continuous period of at least 30 days.
If the employee makes contributions towards the benefit, they reduce the cash equivalent, provided the payments are made by 6 July following the tax year for which the benefit is being calculated. The payments must be specifically for the private use of the car
Percentages – for 19/20 the percentages are 0 – 50g/km 16%, 51-75g/km 19%, 76-94g/km 22% and for 95g/km 23%. After 95g/km for every 5g/km of CO2 emitted above 95, the percentage increases by 1%. The formula is:
% = (emissions – 95) / 5 + 23%
The % can never exceed 37% though, that rate applies to all cars with an emissions figure of 165g/km or above. There is a 4% supplement for diesel cars, unless they meet the Euro 6d emissions standard (RDE2 standard).
If an employee has two cars, the employee has two benefits, and this is calculated in the same way for each of the cars. If an employee’s family member receives a company car, the employee and not the family member will have the benefit and pay tax on that.
Fuel benefit
Fuel benefits – separate benefit arises where private fuel costs are reimbursed. If the employer only pays for fuel for business purposes, no benefit will arise. If an employee is provided will fuel for private motoring, the taxable benefit is identified using the formula:
£24,100 x % based on CO2 emissions.
The fuel benefit is reduced if private use for fuel is not provided to the employee for the whole year. however, if private fuel is withdrawn but reinstated in the same tax year, the benefit will apply for the whole year.
