car tax bands uk

Car Tax Bands UK 2022/23 Explained!

Have you ever heard of the third certainty life? It surely could link to the complicated experiences of taxation among business individuals. There is no ease exception for company car tax bands UK as well. What makes it more confusing is the amendments that are made on annual basis.

For instant, you are using a car for work purposes which are given by your employer, other than the work hours the car is being used for personal use as well. The commute from work to your drop-off location is taken as a benefit second. It is associated with the salary that you are receiving.

According to HMRC the suggested term for this is ‘benefit in kind (BIK). All the incentives and perks you are getting from your employer except for the salary come under this term and it is taxable as well. Several people might already have an idea that this kind of tax is called the company car tax.

In this article, we will cover everything that you need to know related to the complicated world of BIK tax (benefit in kind tax). Moreover, you will learn what are you going to pay and what is the reason behind it.


If you are still looking for more to learn, our professionals can come up with great solutions and spare you to focus more on your business growth.


Learn to Calculate Company Car Tax Bands UK

There are several factors related to the tax bill of your company car. The vehicle’s value has the limelight in this list. Mostly this is known by the name of P11D value. Once you receive the form, the details of company benefits are given to you by the employer then.

P11D value refers to the price list of your car. This includes the details of options that are fitted in the car. Delivery charges and VAT details are a part as well but the road tax and details of the registration fee are not included. There are a few points to consider here, which include the following:

  • The list price is different from the discounted price of the car.
  • Do not consider having a used car and not the new one.
  • The same conditions apply to the new cars as well as the used cars.

P11D value of the car when multiplied by the rate of benefit in kind, it gives you the taxable value for the benefit in the result. Your suitable tax bracket will be 20%, 40% or 45% unless you are residing in Scotland, the rates are different there. It depends on the official CO2 emissions which decide the BIK rates of the company car.

Moreover, the following details will also matter in this regard:

  • The fuel type to power the company car.
  • In the case of a hybrid car, the electric range will matter.


Tax Charges And BIK Rates – Diesel Cars and Electronic Cars

Once upon a time, Diesel cars were very dear to the environment. However, time changes and so do the trends change. The following details are taken into serious consideration before you get to decide anything for yourself.

  • 4% surcharge is on the diesel cars for the rate of public benefit in kind that was registered before 20121 and not considered as Real Driving Emissions Step 2 (RDE2).
  • New diesel cars after they are sold from the date January 2021.
  • Real Driving Emissions Step 2 (RDE2) is the term used for the diesel cars sold from the month of January 2021.
  • 4% surcharge has nothing to do with diesel cars that come under Real Driving Emissions Step 2 (RDE2).

In the case of electronic cars, BIK rates are very low. The individuals connected with this car in 2020-21 enjoyed the 0% rate. However, in 2022-23 it became 1%. It is expected to be 2% in the tax year 2024-25. Whatever the case is, EV drivers have to pay a lot less tax than the other options.


The Bottom Line

The discussion of car tax bands UK can finally be summed up as the basic information is gathered and discussed above. However, if it is still confusing as company car tax is known to be a complicated process, you can get in touch with the relevant professionals and learn to answer your queries well.


Give us a call on 02034411258 or request a callback to talk to one of our experts. We will offer instant help and answer your queries. 


Disclaimer: The information about car tax bands UK provided in this article is general in nature. It Does not intend to disregard any professional help!


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