Company Car Tax: Your Guide

Company car tax: your guide

The Peugeot 308 and 308 SW have models with CO2 emissions below 130g/km

Are you looking for your next company car? While we know ‘must-haves’ include great performance, fuel-efficient mpg – and a high spec – there are other crucial factors to consider.

The 2008 Budget has seen a host of reforms that can directly impact your car choice. A change in 2008/9 vehicle excise duty bands means if you pick a car with emissions over 226g/km, you will have to fork out £400 on road tax.

Compare this to £35-a-year for cars with CO₂ of 120g/km or under and the sums speak for themselves.

Peugeot has tax efficient company cars at all levels – whatever range you are interested in. To help you find the right car, and to save you trawling through lots of dull paperwork, here’s our quick guide to company car tax…

Company Car Tax in 2008/9
Until 2002, company car tax was based on mileage. However, your company car tax liability now depends on your vehicles P11D price and carbon dioxide emissions. And the higher the emissions, the higher the cars tax liability.

For 2008/9, the threshold for the minimum percentage charge rate for calculating company car tax reduces to 135g/km. This rate is frozen until 2009/10, before reducing to 130g/km in 2010/11.

Meanwhile, a new 10% tax band for company cars with CO₂ emissions of 120g/km or less (13% for diesel) was introduced in April.

Benefit-in-Kind Liability
This is the tax that drivers of company cars pay for the benefit of their private use of the car.

EXAMPLE: In 2008/9, a Peugeot 308 Sport HDi 90 5-dr with a P11D price of £16,005 and CO₂ emissions of 120g/km will attract a tax charge of 13% of it’s P11D value.
£16,005 x 13% = taxable value of £2,080.65
This equates to an annual tax bill of £416 for a 20% tax payer and £832 for a 40% tax payer.

Vehicle Excise Duty (VED) in 2008/9
Under the current system, cars are divided into seven road tax bands ranging from £0 for cars emitting less than 100g/km CO₂ up to £400 for the highest polluters.

For 2008/9, the changes include:

Band B: rates for petrol and diesel stay at £35
Bands C-F: £5 rise for vehicles in these bands
Band G: rise to £400 a year (up by £100)
Vehicles running on alternative fuels have their VED frozen at £15

Vehicle Excise Duty (VED) in 2009/10
From April 2009, the structure will see car groups split into 13 bands – again, in favour of low emission vehicles.

This will see a Band M introduced for cars emitting over 255g/km. And from 2010, these Band M cars will see their road tax soar to £950 in the first year.

For more details about specific Peugeot models, check out our tax and CO₂ section.

Back to fleet news homepage