Vehicle taxation

No changes have been announced to the regime for taxing vehicles. We include details of car taxation for 2010-11. Please note that the fuel-only mileage rates increased on 1 June 2010.

The company car continues to be an important part of the remuneration package for many employees despite the increases in the taxable benefit rates over the last few years.

Employees and directors pay tax on the provision of the car and on the provision of fuel by employers for private mileage. Employers also pay Class 1A NICs at 12.8% on the same amount. This NIC charge is payable by the 19 July 2010, (or 22 July if paid electronically).

The amount on which tax and Class 1A NICs is paid in respect of a company car depends on a number of factors. Essentially, the amount charged is calculated by multiplying the list price of the car, including most accessories, by a percentage. The percentage is set by reference to the rate at which the car emits carbon dioxide, according to officially determined rates.

Baseline fuel mileage rates from 1 June 2010

2010/11 taxable benefits table

CO2 in g/km*	Taxable %		CO2 in g/km*	Taxable %
	Petrol	Diesel		Petrol	Diesel
1 to 75	5%	8%	180 to 184	25%	28%
76 to 120	10%	13%	185 to 189	26%	29%
121 to 134	15%	18%	190 to 194	27%	30%
135 to 139	16%	19%	195 to 199	28%	31%
140 to 144	17%	20%	200 to 204	29%	32%
145 to 149	18%	21%	205 to 209	30%	33%
150 to 154	19%	22%	210 to 214	31%	34%
155 to 159	20%	23%	215 to 219	32%	35%
160 to 164	21%	24%	220 to 224	33%	35%
165 to 169	22%	25%	225 to 229	34%	35%
170 to 174	23%	26%	230 and over	35%	35%
175 to 179	24%	27%
* The exact CO2 figure is rounded down to the nearest 5g/km

The discounts for lower emissions vehicles are:

• 2% for bi-fuel lpg and petrol cars manufactured or converted before type approval
• 2% for cars able to run on E85 fuel (type G cars)
• 3% for hybrid electric and petrol cars

Taxable benefit charges on zero-emission vehicles and low emission cars

Legislation in Finance Bill 2010 will introduce a relief from the chargeable benefit where the car or van concerned cannot produce CO₂ engine emissions under any circumstances when driven.

The legislation will also introduce a reduction to the chargeable benefit where a car has an approved CO₂ engine emission figure of between 1 and 75g per kilometre. Company cars within this threshold will be subject to tax of 5 per cent of their list price and the measure will have effect from 6 April 2010 to 5 April 2015.

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Car fuel benefit

The multiplier for car fuel benefit has increased to £18,000.

Car and fuel benefit calculation

The amount chargeable to income tax (user) and Class 1A national insurance contributions (employer) for 2010/11 is calculated by multiplying list price (car benefit) or the fuel multiplier (fuel benefit) by a percentage based on the rate at which the car emits carbon dioxide (CO₂ in g/km) (see table above).

Take a car with a list price of £18,000 when it was first registered (say 31 March 2008) and which emits carbon dioxide at a rate of 176 g/km.

Car benefit	Petrol	Diesel
List price	£18,000	£18,000
Taxable percentage	24%	27%
Taxable benefit	£4,320	£4,860
Tax (20% taxpayer)	£864	£972
Tax (40% taxpayer)	£1,728	£1,944
Tax (50% taxpayer)	£2,160	£2,430
Employer’s Class 1A NIC	£553	£622

 

Fuel benefit	Petrol	Diesel
Multiplier	£18,000	£18,000
Taxable percentage	24%	27%
Taxable benefit	£4,320	£4,860
Tax (20% taxpayer)	£864	£972
Tax (40% taxpayer)	£1,728	£1,944
Tax (50% taxpayer)	£2,160	£2,430
Employer’s Class 1A NIC	£553	£622

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VAT fuel scale charges

Fuel scale charges for VAT

• VAT fuel scale charges for 1 month period
• VAT fuel scale charges for 3 month periods
• VAT fuel scale charges for 12 month periods

VAT fuel scale charges for 1 month periods

CO2 band g/km	From 1 May 2010	From 1 May 2009
120 or less	47.00	42.00
125	70.00	63.00
130	70.00	63.00
135	75.00	63.00
140	80.00	67.00
145	85.00	71.00
150	89.00	75.00
155	94.00	79.00
160	99.00	83.00
165	104.00	88.00
170	108.00	92.00
175	113.00	96.00
180	118.00	100.00
185	122.00	104.00
190	127.00	109.00
195	132.00	113.00
200	137.00	117.00
205	141.00	121.00
210	146.00	126.00
215	151.00	130.00
220	156.00	134.00
225	160.00	138.00
230		142.00
230 or more	165.00
235 or more		147.00

VAT fuel scale charges for 3 month periods

CO2 band g/km	From 1 May 2010	From 1 May 2009
120 or less	141.00	126.00
125	212.00	189.00
130	212.00	189.00
135	227.00	189.00
140	241.00	201.00
145	255.00	214.00
150	269.00	226.00
155	283.00	239.00
160	297.00	251.00
165	312.00	264.00
170	326.00	276.00
175	340.00	289.00
180	354.00	302.00
185	368.00	314.00
190	383.00	327.00
195	397.00	339.00
200	411.00	352.00
205	425.00	365.00
210	439.00	378.00
215	454.00	390.00
220	468.00	403.00
225	482.00	416.00
230		428.00
230 or more	496.00
235 or more		441.00

VAT fuel scale charges for 12 month period

CO2 band g/km	From 1 May 2010	From 1 May 2009
120 or less	570.00	505.00
125	850.00	755.00
130	850.00	755.00
135	910.00	755.00
140	965.00	805.00
145	1,020.00	855.00
150	1,080.00	905.00
155	1,135.00	960.00
160	1,190.00	1,010.00
165	1,250.00	1,060.00
170	1,305.00	1,110.00
175	1,360.00	1,160.00
180	1,420.00	1,210.00
185	1,475.00	1,260.00
190	1,530.00	1,310.00
195	1,590.00	1,360.00
200	1,645.00	1,410.00
205	1,705.00	1,465.00
210	1,760.00	1,515.00
215	1,815.00	1,565.00
220	1,875.00	1,615.00
225	1,930.00	1,665.00
230		1,715.00
230 or more	1,985.00
235 or more		1,765.00

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