1. What is Company Car Tax?

Company Car Tax, also known as Benefit-in-Kind (BIK) tax, is a tax paid by employees who use a company car for private use. The tax amount depends on the car's list price, CO2 emissions, and the employee's income tax bracket.

2. How Does the Calculator Work?

The calculator uses the Company Car Tax formula:

Where:

• \( List Price \) — The manufacturer's list price of the car (GBP)
• \( CO2 Emission Rate \) — The CO2 emission percentage based on the car's emissions
• \( Tax Bracket \) — The employee's income tax rate (%)

Explanation: The formula calculates the taxable benefit value of the company car and applies the employee's tax rate to determine the annual tax liability.

3. Importance of Company Car Tax Calculation

Details: Accurate Company Car Tax calculation is essential for both employers and employees to ensure proper tax compliance, budget planning, and understanding the true cost of company car benefits.

4. Using the Calculator

Tips: Enter the car's list price in GBP, the CO2 emission rate as a percentage, and your tax bracket percentage. All values must be valid positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the CO2 emission rate based on?
A: The CO2 emission rate is determined by the car's official CO2 emissions in g/km and is set by HMRC for each tax year.

Q2: How is the list price determined?
A: The list price includes the car's manufacturer price plus the cost of any accessories fitted before delivery.

Q3: Are electric cars subject to Company Car Tax?
A: Yes, but electric cars typically have lower BIK rates due to zero tailpipe emissions, making them more tax-efficient.

Q4: Can I reduce my Company Car Tax?
A: Choosing a car with lower CO2 emissions, contributing towards private use, or opting for salary sacrifice can reduce tax liability.

Q5: How often is Company Car Tax paid?
A: Company Car Tax is typically deducted monthly through PAYE (Pay As You Earn) along with income tax and National Insurance.