Anyone using a company car outside of working hours (e.g. for private use) will be required to pay company car tax to HMRC.
This is due to the fact you are getting a "benefit" by being allowed to use your work vehicle privately. This benefit is then called a Benefit In Kind or commonly shortened to BiK. A BiK is any benefit that an employee receives in addition to their salary.
Company Car Tax Explained
When a company car is allowed to be used for personal use by an employee outside of work hours, then this is deemed a 'benefit in kind' (BIK) and there is a tax due on a vehicle known as company car tax.
The calculation for the tax of the vehicle is a complicated process. The amount of car tax due will vary depending on a number of factors, including the vehicle P11d, Co2, and your personal tax bracket.
We've made the process nice and simple with our Company Car Tax Calculator.
Choose your car using the form below to get started.
Step by Step Guide to Using the Company Car Tax Calculator
Using the Wessex Fleet company car tax calculator is easy, just follow these simple steps:
1. Enter the details about your vehicle, including its make, model and fuel type, then click Go.
2. Select the exact derivative model of the car you are considering or already own.
3. Add any one-off capital contribution made towards the cost of the car (to a maximum of £5,000), as well as any annual payments made for private use.
4. As company car tax is based on the list price and C02 emissions of the fully configured vehicle, you can add any additional vehicle options like extra assistance systems like high-beam assist, exterior/interior equipment, wheels,
paint or warranty.
5. Click the Quick Tax Calculation button once all relevant data has been added.
6. You’ll then be shown details on the vehicle benefit tax (for the next three tax years) and fuel benefit tax (for the next two tax years) for the car model that you’ve entered. This includes the P11D value, percentage charge, Benefit in Kind
figures, tax payable at a basic rate and tax payable at 40%.
7. You can also view the effect on net pay, by entering earnings figures such as annual salary and any details on if you are using a salary sacrifice scheme for your company car.
8. The vehicle tax calculator will then show you the additional tax that will arise from the use of the car, with breakdowns for different tax years.9. There’ll also be a breakdown of the estimated total you can expect to see on your payslip, to help you decide whether this company car is a good idea for your personal scenario.
10. If you wish, you can then either contact us for a calculation enquiry or calculate tax on another model.
Benefits of using the BiK Company Car Tax Calculator
Here are several reasons why utilising the Wessex Fleet company car tax calculator can be beneficial for you or your business:
Precision: Our calculator employs the latest tax rates and BiK percentages to ensure precise calculations, providing you with a dependable estimate of your company car tax liability.
Efficiency: With a user-friendly interface, our calculator makes it quick and effortless to determine your tax obligations. Within seconds, you can obtain the results, saving valuable time and effort.
Financial Planning: The calculator assists you in effective financial planning. By understanding the tax implications associated with a company car, you can make informed decisions regarding your budget and expenses. This knowledge empowers you to assess the financial feasibility of a company car and explore alternative options if necessary.
Comprehensive Analysis: Our calculator offers a comprehensive breakdown of your tax liability, allowing you to comprehend all the factors that influence the final amount.
Comparison and Decision-Making: If you have multiple company car options, our calculator enables you to compare the tax liabilities associated with each vehicle. This data-driven approach helps you make informed decisions and choose the car that offers the most favourable tax outcome, potentially saving you money in the long run.
Customisation: Our calculator provides optional fields for additiona information, allowing you to personalise the calculation based on your unique circumstances. This ensures that the results are tailored to your specific situation and, therefore, more accurate. Please note that while our Company Car Tax Calculator is designed to provid estimates, it should not be considered professional tax advice. It is always advisable to consult with a qualified tax professional for personalised guidance based on your circumstances.
We hope you find our P11D Company Car Tax Calculator helpful in understanding your company car tax obligations. Start using it now to gain valuable insights into the financial implications of driving a company car.
Still have questions about the calculator?
Take a look at our FAQs about company car tax below or contact us for more information.
What is Company Car Tax?
How is Company Car Tax Calculated in the UK?
The process to calculate your company car tax can be confusing and complicated, but our car tax calculator makes the process very easy.
In a nutshell, you are taxed your regular income tax rate on a percentage of your company car's P11D Value.
The percentage that you pay will vary based on the C02 of the vehicle and your personal tax band.
What is a P11D Value?
The P11D is the value of the car that HMRC uses to work out the tax of a vehicle. It takes the manufacturer's list price of the vehicle, including any options that have been added to the car that aren't deemed as standard, less the first-year VED (Vehicle
Excess Duty).
What are the Different Ways to Reduce Company Car Tax?
There are a few different ways to reduce company car tax, including:
● By making a partial payment towards the car's cost, you can decrease the P11D
value of the vehicle, resulting in a reduction in the amount of company car tax you are liable for.
● Opting for a car with low CO2 emissions is advantageous as it attracts a lower tax rate. Therefore, choosing a vehicle with low CO2 emissions will help in reducing your company car tax obligations.
● Minimising the number of private miles driven in the car will also help in lowering the amount of company car tax you owe. Since the tax is based on the distance covered for personal use, reducing private mileage will result in a reduced tax liability.
What Factors Does the Company Car Tax Calculator Take into Account?
The company car tax calculator takes the following factors into account:
● The P11D value of the car.
● The car's CO2 emissions.
● The number of private miles you drive.
● Your personal tax rate.
What is the Company Car Tax BiK Rate for 2023/24?
Your car’s BiK rate for the financial year 2023/24 will be determined by the factors mentioned earlier. Electric cars, in particular, will have a BiK rate of 2% during this period. However, for vehicles with CO2 emissions exceeding 160g/km, the BiK rate can escalate to a maximum of 37% for this financial year. To learn more about tax rates applicable to your specific vehicle, you can utilise the calculator provided on this page.
Which Cars Have the Lowest Company Car Tax Rates?
Until April 2025, electric cars with a CO2 rating of 0g/km are subject to a tax rate of 2% based on their list (P11D) price. In contrast, even the most fuel-efficient petrol or diesel models begin with a tax rate of 29%. Consequently, if you are seeking a vehicle with lower tax rates, the optimal choice would be an electric car.
Does Company Car Tax Affect My Salary?
When an employee joins a company car scheme, they are required to pay Benefit-In-Kind (BIK) tax as the provision of a company car is considered an additional benefit provided by the employer, alongside the annual salary. The amount of tax an employee owes is determined by various factors including the market price of the vehicle, the individual's income tax band, the car's age, fuel type, CO2 emissions, and engine size.
It's worth mentioning that if the company car scheme includes fuel, the employee will also be liable to pay tax on their annual fuel allowance.