How to calculate company car tax
Looking for help when calculating company car tax? Read this first.
Calculating company car tax is one of the financial duties that can have you scratching your head – complicated further by the fact it never seems to stay constant.
Each year, the amount you need to pay on a given vehicle changes, so it’s important to stay on top of things when calculating company car tax. Simply assuming the number is the same as last year could result in accidental underpayment and an unwelcome fine from HM Revenue & Customs (HMRC) – and nobody needs that.
Want a hand getting to grips with your company car tax this year? Here, we’ll explain how it’s calculated and point you in the direction of some resources that can help.
Calculating company car tax: the formula
Calculating company car tax involves using a set formula. It considers several factors – such as the car’s value, its CO2 emissions and personal tax rates.
First, you need to take the company car’s P11D value. This is its list price, including VAT, along with any other delivery charges. It doesn’t include the car’s registration fee or annual Vehicle Excise Duty (VED) figure.
You’ll then need to multiply the P11D value by the vehicle’s company car tax rate – a percentage – which is set based on its CO2 emissions. These percentages change every year, which is why company car tax needs to be recalculated annually. It’s also important to note that diesel cars face a 4% surcharge on top of the base percentage for their band.
The number you now have is called a Benefit in Kind (BIK) value. To then calculate the amount of company car tax payable, you need to multiply this BIK value by your personal income tax rate, as a percentage.
Because there are a few threads involved, it’s easy to get tangled up when trying to work out what you owe. Fortunately, there are several resources you can turn to which do most of the hard work for you.
HMRC provides several tools to help taxpayers determine what they owe – including a special piece of software just for calculating company car tax.
The online gov.uk car tax calculator is an effective, accurate method for determining how much car tax you owe. It prompts you to provide all the required information, step-by-step. The calculator allows you to check your company cars’ details, communicate with HMRC regarding car changes, and update fuel benefits.
However, this service is not applicable to businesses managing benefits and expenses via payroll, or for any employees who are part of a car share scheme.
As well as HMRC, Comcar has a free calculator tool to figure out what car tax you owe. Anyone can take advantage of this technology and it’s a useful way of keeping on top of your taxes.
It’s clean and simple, with two separate options available for new cars and old cars. All you’ll need to determine the payable tax is choose the make of the car from a drop-down list, the model of that vehicle, and the fuel type. For older cars, you will also need a plate number.
Parkers offer another excellent online calculator for working out car tax.
Completely free and simple to use, this tool works out your car tax costs once you have selected your make, range, model, year/plate, version, tax year and tax rate from a series of drop-down lists.
There’s also a table containing the current tax rates for the year 2018/19 to make things a little clearer and easier.
Use an Allstar card to keep fuel costs down
Running a business fleet can involve a dizzying number of costs to consider. Keeping these down to a minimum can be a challenging task at the best of times, but fortunately, we have a way to help with our range of Allstar fuel cards.
Our cards help you take control of your money, offering full visibility over your spending so you can keep track of your business’ fuel expenditure. There’s a card for every type of business, regardless of whether you run an SME or a larger corporate organisation – and they can all save you money across your fleet.
Get in touch with the Allstar team today on 0345 266 5101 for more information on fleet management and how our services can help you trim fees.