Company car drivers are liable to pay benefit in kind (BIK) on the car. So read below how to work this out and see if it is worth paying
The benefit in kind (BIK) is calculated using three pieces of information
As the rules change almost yearly it is always worth keeping up to date with any changes on GOV.UK
You will need the following information as mentioned above to calculate your personal tax liability
So for example, a car with a P11D value of £30,000, with CO2 emissions of 130g/km will have a 25% tax band.
The calculate your BIK liability follow this simple calculation - £30,000 x 25% (£7500). To work out what you will pay yearly multiply the £7500 by your personal tax band. A 20% tax payer will be liable to pay £1500 a year or £125 a month. A 40% tax payer is liable to pay £3000 a year or £250 a month
If you are unsure use the HMRC calculator
The government has introduced very generous savings on BIK for company car drivers of Electric and Hybrid vehicles. These will slowly disappear over the course of time but its worth seriously considering this type of vehicle. Check out our Electric Vehicles here
Tax rules for vans are slightly different and are based on a flat rate of £3500. You are liable for BIK on LCVs if you drive any personal mileage. However HMRC have a rule that includes 'insignificant private use' so for example calling to the Doctors during business hours, HMRC sees this as having no discernible 'Benefit in Kind'