Company car tax
For business motorists or those individuals using their vehicle for commercial use, understanding the latest company car tax rules is essential. The impact on your personal tax - and also the benefits of choosing a more eco-aware model - means that choosing the right vehicle for your professional use is key. At present, vehicle emissions are responsible for approximately 20% of the world’s CO2, so the government is actively encouraging motorists to select greener vehicles and is incentivising commercial motorists through preferential tax rates.
As demonstrated in the table below, you will be able to determine which models provide the most cost effective option for you.
How company car tax works
Company car tax is calculated on a percentage of the P11D value of your car. This value is the manufacturer’s new price, plus VAT, delivery, number plates and any additional extras. The percentage is then calculated based on the CO2 emissions of the vehicle and its fuel type, with details provided in the table below. Once the value has been calculated, the tax will be deducted from your salary every month.
Want to learn more about company car tax and how the Ford lineup of vehicles will impact your own business? Get in touch with a member of the team at M53 Ford today to learn more. We’ll be delighted to answer any questions you may have and help calculate the impact of any of the vehicles we have available.
|% of P11D price CO2 (g/km) to be taxed*||CO2 (g/km) 2013/14*||CO2 (g/km) 2014/15*||CO2 (g/km) 2015/16*||CO2 (g/km) 2016/17**|
Once you have worked out your P11D value, discovered what percentage of it you’ll pay tax on, and calculated the figure that amounts to, bear in mind that you pay tax on it at your higher rate (either 20% or 40%). This is normally deducted every month from your salary.
Diesel engines produce less CO2, so your actual company car tax bill should be smaller than the equivialnt size petrol engine. But other factors may offset this and make diesels just as expensive overall.
For a start, diesel models usually cost more than the petrol equivalent, so you have to make sure the higher P11D price doesn't outweigh any advantage from a lower tax banding.
Diesel fuel costs more at the pumps than petrol too, so you need to meet the predicted fuel economy figures from the manufacturer to really benefit.
And finally, diesel company cars have a 3% surcharge added to their tax band, bcause of concerns about particulates and other pollutants that come out from diesel exhausts.
There is a 3% discount for hybrids (petrol/electric cars), a 2% discount for LPG and a 6% discount for electric-only cars.
You may face a further tax if your employer provides 'free' fuel for private motoring. This could be because you use a company fuel card, for example, and don’t repay the private usage element, or because your employer pays for travel between home and work.
The taxable benefit is now based simply on the Government derived figure of £14,400, multiplied by the same percentage derived from the CO2 table.