Company car benefit examples (480: Appendix 1)
Find out more information on how to work out the benefit charge for company car use.
Examples 1 to 5 relate to the 2018 to 2019 tax year.
Examples 6 to 7 relate to the 2020 to 2021 tax year.
Steps 1 and 2 (chapter 12 paragraphs 12.4 to 12.15) .
Example 1
A car with a list price (including standard accessories, VAT, number plates and delivery) of £17,960 is made available to an employee. It’s supplied with optional metallic paint costing £245, the price for which is published by the car’s manufacturer.
Before being made available to the employee it’s also fitted with an electrically-operated radio aerial from an independent manufacturer costing £95 (including fitting).
All the optional accessories are qualifying accessories. The radio aerial has a price of less than £100 but it was made available at the time the car was made available and so the ‘de minimis’ limit of £100 does not apply.
Calculation
Section 123
Step 1: Car £17,960
Step 2:
Section 127(1)(a)
Plus Initial extra accessories in the car manufacturer’s price list.
- metallic paint £245
Section 127(1)(b)
Plus Initial extra accessories not in the car manufacturer’s price list (use price of accessory manufacturer).
- radio aerial £95
Section 121(1) step 2
Price of the car after step 2 £18,300.
Example 2
Employee and car as in Example 1. In September of the same tax year, 2 extra accessories are fitted:
- a Bluetooth device with a list price of £360 (including fitting and others), the employee pays £100
- roof rails with a list price of £80, the employee pays £50
Calculation
Sections 126(3) and 127(2)
As above, £18,300 plus Later accessory (Bluetooth device) £360 = £18,660.
Section 121(1) step 2
Minus capital contributions, Bluetooth device £100.
Price of the car after step 2 £18,560.
Sections 126(3) and 132(1)(b)
The price of the roof rails is not added because they’re below the ‘de minimis’ limit of £100 and therefore the capital contribution towards them is not deducted.
The figure at step 2 is increased for the whole year because the Bluetooth device was added in the year. There’s no time-apportionment.
Steps 4 to 6 (chapter 12 paragraphs 12.21 to 12.38).
Example 3 – petrol car
Price of the car is £15,000. Approved figure of CO2 emissions is 173g/km.
Round down 173 to 170 Look up appropriate percentage in Appendix 2 – 35%.
No adjustments are needed in paragraph 12.29 so this is the appropriate percentage.
The figure at step 5 is £15,000 x 35% = £5,250.
Example 4 – diesel car
Price of the car is £15,000. Approved figure of CO2 emissions is 156g/km.
Round down 156 to 155 Look up appropriate percentage in Appendix 2 – 32%.
Add 4% diesel supplement (see chapter 12 paragraph 12.29), so appropriate percentage is 36%.
The figure at step 5 is £15,000 x 36% = £5,400.
Example 5 – hybrid electric car with petrol
Price of the car is £18,000. Approved figure of CO2 emissions is 104g/km.
Round down 104 to 100.
Appropriate percentage for a petrol-powered hybrid with CO2 emissions of 100g/km is 21% (Appendix 2).
No adjustment from paragraph 12.29 is needed The figure at step 5 is £18,000 x 21% = £3,780.
Example 6 – hybrid electric car with petrol 2020 to 2021
Price of the car is £32,000. The car was first registered on 22 March 2020. The approved CO2 emissions figure is 50g/km. The zero emission mileage is 77.
The appropriate percentage for a petrol-powered hybrid with CO2 emissions of 50g/km and a a zero emission mileage of 77 miles is 5% - the car was first registered before 6 April 2020 so the NEDC emissions figure on the certificate of conformity should be used.
No adjustment from paragraph 12.29 is needed. The figure at step 5 is £32,000 x 5% = £1,600.
Example 7 – hybrid electric car with petrol 2020 to 2021
The price of car is £22,000. The car was first registered on 6 April 2020. The approved CO2 emissions figure is 50g/km. The zero emission mileage is 65.
The appropriate percentage for a petrol-powered hybrid with CO2 emissions of 50g/km and a zero emission mileage of 65 miles is 6% - the car was first registered on or after 6 April 2020 so the WLTP emissions figure on the certificate of conformity should be used.
No adjustment from paragraph 12.29 is needed. The figure at step 5 is £22,000 x 6% = £1,320.
Last updated 6 April 2020 + show all updates
-
Two new examples for hybrid electric cars for the 2020 to 2021 tax year have been added.
-
First published.