In this video I am going to run you through how to calculate a car benefit for an employee that is time apportioned alongside how to calculate a car fuel benefit for an employee.
If you want to learn more about the CPAA and the accounting qualifications available, please see below: www.cpaa.co.uk/
The starting point for calculating a car benefit in kind is the list price of the car plus accessories. If the accessories are fitted later, they are only added to the list price if they cost at least £100 each. The percentage of the list price that is taxable depends on the car’s CO2 emissions.
2. An employee may make a capital contribution towards the cost of the car. Such capital contributions reduce the price of the car used in the benefit in kind calculation in the year the contribution is made and future years. The deduction to the price for capital contributions is capped at £5,000.
3. As shown in the Tax Table, the car benefit percentage to apply depends upon the CO2 emissions of the car. For vehicles with CO2 emissions in excess of 95g/km, the percentage increases by 1% for every 5g/km (rounded down to the nearest multiple of 5) by which CO2 emissions exceed 100g/km up to a maximum of 35%.
4. Diesel cars have a supplement of 3% of the car’s list price added to the taxable benefit although the maximum percentage remains at 35%.
5. The benefit is reduced on a time basis where a car is first made available or ceases to be made available during the tax year.
6. The benefit is reduced by any payment the user must make for the private use of the car, this is separate to capital contributions towards the cost of the car.