Company Car Tax… A quick explanation for 2018/2019
A Company Car is taxed as it is effectively additional income.
It is taxed as Benefit-in-Kind (BIK) and falls outside standard National Insurance criteria.
Its calculation is made up of annual earnings and thus your marginal tax rate, cost of the car (it’s P11D) value and also the CO2 emissions of the car.
Your new company car has a BIK band. Calculated from the list price including extras and VAT but excluding the road fund licence and any vehicle tax.
For example, a mid-range Audi diesel has emissions of 129 which equates to a taxable percentage of 26%. In the case of the A3 Sportback, its P11D is £23,400.
£23,000 x 26% = BIK £6,941
The tax payable depends on your earnings,
@ 20% the tax payable for the benefit is £1,388
@40% the tax payable for the benefit is £2,776
Diesel Supplement – 4% is added to the taxable percentage for diesels, so in the case of the Audi above, a further 4% is added.