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Calculating company car tax

  • A guide to working out your company car tax
  • Step-by-step plan shows how to deal with options
  • Our Vauxhall Astra used as an example

Company car tax can be confusing at the best of times, but it’s a necessary evil. We all have to pay it, so here’s a guide to working out exactly how much BIK you’ll have to pay.

Although online company car tax calculators are useful, they don’t take into account optional extras, which can add significant amounts to your monthly tax bill. The only way to work out exactly what you have to pay for your particular car is to crunch the numbers yourself. With that in mind, here’s how to work out your company car tax.

As an example, let’s take one of the cars on the Parkers long-term test fleet. For this exercise we’ll use the Astra 2.0 CDTi SRI ECOflex.

The first thing you need to know is the P11d value. This is the RRP of the car minus first registration fee and road tax. It does include VAT, delivery and all optional extras. For my Astra the basic P11d price is £22,670, but we've got loads of options on it too which bring the P11d value up to £25,490.

Next, we need to work out which band the car falls into. Taking the CO2 emissions of 119g/km and comparing to the company car tax table here you can see the car sits in the 13% benefit-in-kind threshold.

So to find out how much tax you pay, simply take the P11d value and times by the percentage. In this case, that's £25,490 x 0.13 = £3313.70

Now you multiply that number by the relevant amount of tax you have to pay. If you earn less than £37,000 you're on the basic rate of 20%. If you earn between £37,001 and £150,000 you're a higher rate payer and pay 40%. Anything above that and you're an additional rate payer and are in for 50%.

So, assuming you’re a 20% tax payer, you'd take £3313.70 x 0.2 = £662.74

We now have the annual tax bill. For monthly amounts simply divide by 12.

£662.74 / 12 = £55.23 per month in company car tax. Not bad value when you compare the same car on a four year PCP scheme could cost around £470 each month.