These are commonly referred to as company cars and are taxed by reference to the list price of the car but graduated according to the level of its carbon dioxide (CO2) emissions. We outline the main areas to consider and the tax and national insurance implications. If your business is in the Lancashire area or you are employed in the area we, at Coates & Co, can advise you on the employer provided car benefit rules.

The current regime for taxing employer provided cars (commonly referred to as company cars) is intended:

  • to encourage manufacturers to produce cars which are more environmentally friendly and
  • to give employee drivers and their employers a tax incentive to choose more fuel-efficient and environmentally friendly vehicles.


We set out below the main areas of importance. Please do not hesitate to contact us if you require further information.

The rules

Employer provided cars are taxed by reference to the list price of the car but graduated according to the level of its carbon dioxide (CO2) emissions.


In addition, the government has reduced the percentages which apply to lower emissions cars and introduce new performance-related bands for hybrid vehicles with emissions up to 50 g/km depending on how far the hybrid vehicle can travel under electric power.

Percentage charges (2022/23)

CO2 emissions (g/km)
% of list price taxed

0

2

1 – 50 (split by zero-emission miles)


More than 130

70-129

40-69

30-39

<30

2

5

8

12

14

51 – 54

15

55 – 59

16

60 – 64

17

65 – 69

18

70 – 74

19

75 – 79

20

80 – 84

21

85 – 89

22


23

For every additional 5g thereafter add 1% until the maximum percentage of 37% is reached.

Examples

David has a company car, a Hyundai Ioniq, which had a list price of £28,395 when it was provided new on 6 April 2022. The CO2 emissions are 26 g/km and its electric range is 39 miles.

David's BiK for 2022/23 is: £28,395 x 12% = £3,407.

How we can help

If you are in the Lancashire area and would like more advice on the tax treatment and advantages of using cars and vans in your business, contact Coates & Co.

Coates & Co

2 Fairhope Avenue

Bare

Morecambe

Lancashire LA4 6JZ


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ICAEW Chartered Accountants

Coates & Co is the trading name of Tony Coates & Co Limited, Registered in England, Registered Number: 6140774

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