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Business Users - Company Car Tax Explained

Helpful Business User Information & Advise

Gates Ford in Essex & Hertfordshire

Company tax is a necessary payment on vehicles for business use. It takes into account the fact that you have a car you can use in a personal or professional capacity. It is also designed to encourage you to use a more environmentally-friendly vehicle.

The government is attempting to that ensure everybody drives the greenest possible vehicles, to cut down the percentage that road transport contributes to all emissions. That figure currently stands at 20 percent. With this in mind, the amount of tax you pay on your company car is directly linked to the amount of CO2 emissions it produces.

Check out this company car tax calculator to work out how much you will pay. You can also view the official emissions banding for each Ford car here.

How does Company Car Tax work?

The amount of tax is based on a set percentage of the P11D value of the car. The P11D value is worked out by taking the price of the car new, plus VAT, delivery, number plates and any other extras.

The percentage of this value used in the calculation is then decided based on the CO2 emissions from the car and its fuel type.

You will pay tax on your company car at the higher rate of tax, and it should be deducted from your salary automatically.

Diesel Cars Company Tax

Diesel cars typically produce less CO2 emissions than petrol engines. However, this doesn’t mean that you will automatically have lower running costs by choosing a diesel engine. In many cases, diesel cars can be more expensive to buy in the first place – and diesel prices at the pump are not always low. You will also find a three percent surcharge on the diesel tax band, due to concerns about other pollutants from diesel exhausts.

Company Car Tax for Hybrids

Hybrid cars, of which there are a growing number in the Ford range, mean you benefit from a three percent discount on tax. There is also a two percent discount on LPG and a six percent reduction on electric-only cars.

Free Fuel Benefit

Free fuel for private motoring from your employer can be taxed as well. This might be because you use a company fuel card, or if you do not have to repay the private usage element. It will also apply if your employer pays for your travel between home and work.

Find out more about company car tax by speaking to a member of our business management team. If you have any questions please don’t hesitate to contact your nearest Gates Ford dealership today.

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