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Tax: what is company car tax?

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30 November 1999

Company-provided vehicles are taxable

Company cars are taxed if there’s private use

If a company provides an employee or director with a car for business and private use, it is taxed – provided the employee or director earns £8500 or more per year.

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This is known as company car tax.

Tax is also payable if the company provides a member of their family or household with a car. Private use includes commuting – and the car merely has to “be available to you” for private use.

Company car tax is sometimes called benefit-in-kind tax (BiK in shorthand).

The taxman believes you are getting an additional benefit outside of work from work-supplied equipment, so he taxes you on it.

The amount of company car tax you pay is broadly determined by:

  • The list price of the car and any accessories fitted to it.
  • The car

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Ralph Morton

Ralph Morton

Ralph Morton is an award-winning journalist and the founder of Business Car Manager (now renamed Business Motoring). Ralph writes extensively about the car and van leasing industry as well as wider fleet and company car issues. A former editor of What Car?, Ralph is a vastly experienced writer and editor and has been writing about the automotive sector for over 35 years.

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