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How do I work out my company car tax?
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Benefit-in-kind payments on company cars

Company employee wants to know how to work out company car tax
How do I work out my company car tax?

I’VE been given a company car for the first time – a BMW 320d EfficientDynamics. I’m excited about getting the car, but I don’t fully understand company car tax. Could you explain, please?

Mike Lloyd, managing director of Central Contracts, explains how to work out company car tax.

ANY company car attracts a benefit-in-kind (BIK) tax. The amount you pay is determined by two factors: the cost of the car (its P11d value) and the amount of the car’s CO2 emissions (expressed as g/km) based on a percentage scale.

The lower the car’s price and emissions, the less company car tax – or BIK – will be paid by you. Diesel cars are subject to a 3% surcharge on this percentage scale.

The next step is to establish the car’s CO2 emissions. In the case of the BMW 320d EfficientDynamics, this is 109g/km. On the company car tax band scale this attracts a 13% BIK charge – see our Company car taxation table.

You then multiply the car’s P11d price – the cost of the car for taxation purposes, excluding delivery charges – by the company car tax band charge.

In this case it is £27,245 x 13% = £1353.

To arrive at the company car tax rate payable by you, take the above figure and then multiply it by your nominal rate of tax – either 20% (£707 a year) or 40% (£1414).

The more options you add to the car, by the way, the more the company car tax will increase.

Editor’s note. You can read a road test of the BMW 320d EfficientDynamics, by clicking on the following link: BMW 320d EfficientDynamics – the BMW that redefines the company car.

In the specification panel of the road test you will find a link to our Company Car Tax Calculator. Click on this link, select BMW 320d EfficientDynamics from the list of cars, and your BIK on the car will be displayed.


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