Home > > 21 March 2007 Budget Report > Company cars

Company cars

Car benefit

The threshold CO2 emissions rate is frozen at 140 g/km until 5 April 2008. The threshold for 2008/09 will be 135 g/km. The rate of the taxable benefit ranges from 15% to 35% of list price (plus certain accessories) for most petrol or diesel-powered cars.

You can find your taxable percentage of the list price for 2007/08 using the following table:

Company car tax rates


Gas Guzzlers
But the chancellor was accused by critics of doing too little to confront global warming, despite backing a review by the economist Sir Nicholas Stern that called for urgent action on the environment

Diesel cars are generally subject to a 3% surcharge - with some exceptions, the taxable benefit for a diesel car is 3% higher than for a petrol car with identical CO2 emissions. The 3% surcharge was waived for cars which complied with Euro IV emissions standards, and this applies to 5 April 2006. Thereafter, the waiver applies only to Euro IV compliant cars first registered no later than 31 December 2005.

The discounts for lower emissions vehicles are:

  • 2% for bi-fuel lpg and petrol cars manufactured or converted before type approval
  • 3% for hybrid electric and petrol cars
  • 6% for electric-only cars.

With effect from 2008/09, there will be a reduced taxable percentage rate of 10% for those cars with CO2 emissions of 120 g/km or less.

Back to top

Car fuel benefit

The multiplier for car fuel benefit has not changed since the current scheme was introduced. It stands at £14,400.

Car and fuel benefit calculation

The amount chargeable to income tax (user) and Class 1A national insurance contributions (employer) for 2007/08 is calculated by multiplying list price (car benefit) or the fuel multiplier (fuel benefit) by a percentage based on the rate at which the car emits carbon dioxide (CO2 in g/km) (see table above).

Take a car with a list price of £18,000 when it was first registered (say 31 March 2007) and which emits carbon dioxide at a rate of 180 g/km.

Car benefit Petrol Diesel
List price £18,000 £18,000
Taxable percentage 23% 26%
Taxable benefit £4,140 £4,680
Tax (22% taxpayer) £911 £1,030
Tax (40% taxpayer) £1,656 £1,872
Employer’s Class 1A NIC £530 £599


Fuel benefit Petrol Diesel
Multiplier £14,400 £14,400
Taxable percentage 23% 26%
Taxable benefit £3,312 £3,744
Tax (22% taxpayer) £729 £824
Tax (40% taxpayer) £1,325 £1,498
Employer’s Class 1A NIC £424 £479
Back to top

VAT fuel scale charges

Fuel scale charges for VAT

VAT fuel scale charges for 1 month periods

CO2 band g/km From 1 May 2010 From 1 May 2009
120 or less 47.00 42.00
125 70.00 63.00
130 70.00 63.00
135 75.00 63.00
140 80.00 67.00
145 85.00 71.00
150 89.00 75.00
155 94.00 79.00
160 99.00 83.00
165 104.00 88.00
170 108.00 92.00
175 113.00 96.00
180 118.00 100.00
185 122.00 104.00
190 127.00 109.00
195 132.00 113.00
200 137.00 117.00
205 141.00 121.00
210 146.00 126.00
215 151.00 130.00
220 156.00 134.00
225 160.00 138.00
230 142.00
230 or more 165.00
235 or more 147.00

VAT fuel scale charges for 3 month periods

CO2 band g/km From 1 May 2010 From 1 May 2009
120 or less 141.00 126.00
125 212.00 189.00
130 212.00 189.00
135 227.00 189.00
140 241.00 201.00
145 255.00 214.00
150 269.00 226.00
155 283.00 239.00
160 297.00 251.00
165 312.00 264.00
170 326.00 276.00
175 340.00 289.00
180 354.00 302.00
185 368.00 314.00
190 383.00 327.00
195 397.00 339.00
200 411.00 352.00
205 425.00 365.00
210 439.00 378.00
215 454.00 390.00
220 468.00 403.00
225 482.00 416.00
230 428.00
230 or more 496.00
235 or more 441.00

VAT fuel scale charges for 12 month period

CO2 band g/km From 1 May 2010 From 1 May 2009
120 or less 570.00 505.00
125 850.00 755.00
130 850.00 755.00
135 910.00 755.00
140 965.00 805.00
145 1,020.00 855.00
150 1,080.00 905.00
155 1,135.00 960.00
160 1,190.00 1,010.00
165 1,250.00 1,060.00
170 1,305.00 1,110.00
175 1,360.00 1,160.00
180 1,420.00 1,210.00
185 1,475.00 1,260.00
190 1,530.00 1,310.00
195 1,590.00 1,360.00
200 1,645.00 1,410.00
205 1,705.00 1,465.00
210 1,760.00 1,515.00
215 1,815.00 1,565.00
220 1,875.00 1,615.00
225 1,930.00 1,665.00
230 1,715.00
230 or more 1,985.00
235 or more 1,765.00

Back to top

VED rates

Band CO2 emissions g/km Petrol Diesel Alternative fuel
A 100 and below £0 £0 £0
B 101 - 120 £35 £35 £15
C 121 - 150 £115 £115 £95
D 151 - 165 £140 £140 £120
E 166 - 185 £165 £165 £145
F 186 - 225 £205 £205 £190
G* 226 and above £300 £300 £285
* New cars registered from 23 March 2006
Back to top