A tax charge may arise if an employee is able to use a company car or van for private use. A further charge will arise if you provide the fuel for any private use. The taxable amounts that will apply for 2022/23 have now been announced.
Where an employee has a company car, if that car is available for their private use, they are taxed on the benefit of that private use.
The amount that is charged to tax is a percentage (the appropriate percentage) of the car’s list price and any optional accessories (as reduced for any capital contributions up to £5,000). The charge is reduced where the car is not available for the full year, and also for any private use contributions made by the employee.
The appropriate percentage depends on the car’s carbon dioxide (CO2) emissions. A supplement of 4% applies to diesel cars not meeting the RDE2 standard. The appropriate percentage is capped at 37%.
The appropriate percentages applying for 2022/23 are available on the Gov.uk website.
For 2022/23, electric cars are taxed on 2% of their list price, regardless of the date of first registration.
If the employee is provided with fuel for private journeys, a separate fuel benefit charge applies. The taxable amount is the appropriate percentage used to calculate the car benefit charge multiplied by the set figure for the tax year. For 2022/23, this is £25,300.
There is no charge if you pay for electricity for private use of an electric company car.
If you provide an employee with a company van, and they have unrestricted private use of that van, unless the van is an electric van, a tax charge will arise. For 2022/23, the taxable amount is £3,500. If you also provide fuel for private journeys, a separate fuel charge arises. For 2022/23, this is valued at £688.
There is no charge where an employee uses an electric company van for private use.
We can help you understand how to provide tax efficient company cars and vans to your employees.