Company cars and fuel

Company car benefits are calculated by reference to the CO2 emissions. The level of business mileage is not relevant. The greener (environmentally!) the car, the lower the charge.

Businesses purchasing ‘green’ cars with CO2 emissions not exceeding 120 gm/km can generally write off the full cost of the car in the year of purchase. If the car is for the proprietor of an unincorporated business the allowances will be restricted to take account of the proportion of private use.

Tip
Check your position to confirm that the company car is still a worthwhile benefit. It may be better to receive a tax-free mileage allowance that could be up to 40p per mile for business travel in your own vehicle.

Where private fuel is provided, the charge is also based on CO2 emissions. You should review the arrangements to ensure no unnecessary tax charge arises. If you have opted out of free fuel during the year, the charge will be proportionally reduced. However where you opted in during the year a full charge is applied.