Understanding how company vehicles affect your tax position is essential — whether you’re a business owner providing cars to employees or an individual using a company car.
If an employee uses a company car for personal travel (including commuting), a taxable car benefit arises. This is calculated based on:
The list price of the car when new (including accessories)
A percentage rate tied to the car’s CO₂ emissions
Diesel surcharge: Add 4% for diesel cars (unless Euro 6d compliant and registered after 1 Sept 2017)
Key Notes:
Maximum tax rate is capped at 37%
Employees can reduce the list price by capital contributions up to £5,000
Special rules may apply for disabled employees
| CO2 emissions (gm/km) | % of car's price taxed |
|---|---|
| 0 | 3 |
| 1-50: Electric range >130 | 3 |
| 1-50: Electric range 70-129 | 6 |
| 1-50: Electric range 40-69 | 9 |
| 1-50: Electric range 30-39 | 13 |
| 1-50: Electric range <30 | 15 |
| 51-54 | 16 |
| 55-59 | 17 |
| 60-64 | 18 |
| 65-69 | 19 |
| 70-74 | 20 |
| 75-79 | 21 |
| 80-84 | 22 |
| 85-89 | 23 |
| 90-94 | 24 |
| 95-99 | 25 |
| 100-104 | 26 |
| 105-109 | 27 |
| 110-114 | 28 |
| 115-119 | 29 |
| 120-124 | 30 |
| 125-129 | 31 |
| 130-134 | 32 |
| 135-139 | 33 |
| 140-144 | 34 |
| 145-149 | 35 |
| 150-154 | 36 |
| 155 and above | 37 |
If a company provides fuel for private use, an additional benefit applies.
Fuel Benefit = Car Benefit % × Fuel Charge Multiplier
Fuel Charge Multiplier (2025/26): £28,200
This benefit is reduced proportionally if private fuel is withdrawn mid-year
If the employee reimburses all private fuel costs, the benefit is zero
If a company van is used for private travel, a flat-rate benefit is taxed.
Standard Van Benefit: £4,020
Fuel Benefit (if private fuel provided): £769
Vans with no CO₂ emissions may qualify for a reduced charge
If private use is restricted to home-to-work travel, the benefit may be exempt
These HMRC-published rates are used when:
Employers reimburse fuel for business miles
Employees repay fuel costs for private travel
Key Point: If the reimbursement matches HMRC’s advisory rate, there is no taxable benefit.
Rates vary quarterly by engine size and fuel type. Contact us for the latest figures.
If employees use their own vehicles for business journeys, employers can pay a tax-free mileage allowance.
| Vehicle type | Pence per mile |
|---|---|
| Cars and vans - up to 10,000 miles | 45 |
| Cars and vans - over 10,000 miles | 25 |
| Bicycles | 20 |
| Motorcycles | 24 |
Let AppleGrow ensure you’re tax-efficient and fully compliant.
