As accountants, one of the most common questions we get from clients at Hammond-Barr Accountants is about the tax implications of company vehicles. Whether you're an employee or a director, it's crucial to understand how using a company car, van, or motorbike can impact your income tax liability. 

 

This post will break it down and cover the key points you need to know. 

If your employer provides you with a company car or van, you might be liable for income tax on this benefit in kind. For cars, the taxable amount is a percentage of the original list price, which is determined by the car's CO2 emissions. For vans, there's a fixed charge regardless of CO2 emissions. 

 

When calculating the car benefit, the price used is the full list price (including VAT and delivery charges) at the time the car is first registered. This includes optional accessories provided with the car and the list price of accessories costing £100 or more added to the car. However, you can ignore the cost of in-car mobile telephones and certain security enhancements. If you're a disabled driver who needs to drive an automatic car, the CO2 figure used is that of the equivalent manual car. 

 

If your employer provides you with fuel for personal journeys, this is also a taxable benefit in kind. The amount is calculated by applying the percentage applicable to the car to a fixed amount: £27,800 for 2024/25. Since 6 April 2018, employer-provided electricity for electric or hybrid cars has been exempt from tax. 

 

Keep in mind that from 6 April 2018, the diesel supplement increased from 3% to 4%, but it can be 0% if the car is certified to the Real Driving Emissions 2 standard. 

If you take your company van home but don't use it for private journeys, you're exempt from any tax charge. However, if you do make private use of the van (like personal trips other than commuting), there's a flat rate benefit in kind of £3,960 for 2024/25. 

 

The fuel scale charge for a van with significant private use is a flat £757 for 2023/24 and 2024/25, and it can be reduced proportionately if the van isn't available for part of the year. 

 

This charge also applies to vans that produce no CO2 emissions. 

If your employer gives you a motorbike that you can also use privately, you'll be liable for income tax on this benefit in kind. The taxable amount is 20% of the final purchase price plus 100% of all related expenditures incurred during the year. 

If you use a company vehicle, keeping accurate records of your business and personal mileage is essential. This will help ensure that you're paying the correct amount of tax on your benefit in kind. 

 

At Hammond-Barr Accountants, we're here to help you navigate the complex rules around company vehicles and ensure you're fully compliant with HMRC regulations. 

 

Contact us today to schedule a consultation and learn more about how we can help you manage your tax liabilities related to company vehicles. With our expertise and personalised service, you can have peace of mind knowing that your finances are in good hands. 

 

Don't hesitate to reach out - we're here to help!