Company car benefit

In this lesson

1. 0:00 Company car benefit calculations overview
2. 1:02 Capital contributions and employee deductions
3. 2:08 Part-year availability and running cost relief
4. 3:20 CO2 emissions and percentage rates explained
5. 5:08 Diesel surcharge and maximum percentage cap
6. 5:39 Worked example: calculating taxable benefit

About this lesson

The calculation itself is straightforward once you understand the rules around discounts, optional accessories, capital contributions, and how to handle different fuel types and emission standards. The core formula is list price multiplied by a percentage, but several adjustments matter. HMRC ignores any discounts and uses the list price instead. Optional accessories over £100 are added to the list price, while employee capital contributions reduce it (capped at £5,000). If the car is provided for less than a full year or is unavailable for 30 days or more, you'll prorate the benefit. Running cost contributions paid by the employee reduce the final taxable benefit. The percentage depends on the car's CO2 emissions and fuel type. Electric cars are fixed at 3%, while petrol and diesel cars start at a base of 17% for emissions at or below 55g/km. For every 5 grams of CO2 above 55g/km, you add 1% to the percentage. Diesel cars not meeting the D2 standard incur an additional 4%. The maximum percentage is always capped at 37%, regardless of how high your calculation goes. Hybrid cars require you to check their electric range in the tax tables to determine the correct percentage. You'll work through a practical example showing how to calculate the percentage for a petrol car with 95g/km emissions, then multiply by the list price to find the taxable benefit. Practising these calculations repeatedly before your exam is essential—they're highly examinable and the rules are precise.

Duration: 7m