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|How is company car tax calculated?|
|A graduated system of tax was introduced in April 2002 that bases company car tax rates on CO2 emissions. A vehicle's CO2 emission level determines the percentage of the on the road cost that can be taxed. This means that vehicles with lower CO2 emissions will incur a lower tax liability. |
|How are CO2 levels measured?|
|CO2 emission levels are measured in terms of the weight of CO2 produced for every kilometre that the vehicle travels (g/km). A measurement is made for all new BMW models by BMW's own European Union Approved Test Centre. |
All new vehicles registered after March 2001 will include their official CO2 rating on their registration document (V5).
For vehicles registered prior to this date please click on the question 'What if the vehicle was first registered before March 2001' below.
|What is the P11d value of a car?|
|The P11d value of a car will generally be the manufacturer's list price for the car (and any options fitted) including VAT, number plates and delivery charges, excluding any options which cost less than £100 and which were fitted after the car was first made available to you.|
|Who measures the vehicle's CO2 emissions and when?|
|Each new model on sale in the UK from March 2001 is given an authoritative CO2 emission figure as part of the vehicle's 'Type Approval Test' which is carried out prior to first registration by the manufacturer. BMW's own European Union Approved Test Centre is responsible for doing this for all new BMW's. |
This figure remains unaltered for the entire life of the vehicle and appears on its registration document (V5).
|What if the vehicle was first registered before March 2001?|
|If the vehicle was first registered between 1st January 1998 and 28th February 2001, then an authoritative CO2 emission figure will not appear on its registration document (V5). However, cars of this age are included within this new legislation and therefore its emissions figure will still be relevant. |
The Inland Revenue recommend the use of The Society of Motor Manufacturers and Traders' (SMMT) CO2 emissions enquiry service on the Internet in order to find the CO2 emission figure for cars in this category. Please note that the SMMT Website and its content is not in any way endorsed by BMW (UK). For more information please visit www.smmt.co.uk
What if my vehicle was first registered before January 1998?
If the vehicle was first registered before 1st January 1998 or is a one-off or privately imported model with no authoritative CO2 emission figure, then the percentage of its P11d value to be taxed will not be based on the car's CO2 emissions but its engine size instead.
|Is there an example available to show how the CO2 emission tax is calculated?|
|Benefit in Kind (BIK) tax is predicated on the CO2 emissions of a vehicle. The BIK rate is multiplied by the P11d price of the car to derive the value of the annual taxable benefit. The rate of income tax paid by the driver is then applied to this amount to give the annual BIK charge. |
As an example, the BMW 320d EfficientDynamics Saloon has a P11d value of £27,845 and incurs a 2011/2012 BIK tax rate of 13%* thanks to CO2 emissions of 109g/km (see BIK tax bandings). This makes the annual taxable benefit of the 320d EfficientDynamics saloon £3,619.85, meaning a 40% tax payer would pay a total of £120.66 per month**.
Vehicle Excise Duty (also known as VED or Road Tax) is also related to CO2 emissions, with cars emitting 130g/km or less attracting no charge in the first year. At 109g/km the BMW 320d EfficientDynamics sits in VED Band B (101-110g/km). Band B vehicles pay no VED in the first year and £20 each following year***.
Write-down allowance is another consideration for outright purchasers. Capital allowance rules allow businesses to offset a proportion of a new car's depreciation in the first year of ownership against corporations tax. Vehicles emitting up to 110g/km offer 100% write-down allowance, while those emitting 111g/km-160g/km offer 20% WDA. Cars emitting over 160g/km offer 10% WDA.
*rate varies between petrol and diesel cars
**figures correct at time of publishing (May 2011)
***based on 2011/2012 VED structure