- Do you know your BIK from your P11d?
- We reveal the company car terms you need
- Never be confused using our A-Z guide
Company car tax is a confusing subject at the best of times.
Here at Company Car Driver we want to make life as transparent and simple as possible for you, so we've dissected the important company car terms that you need to know and laid them out in simple, alphabetised and bite-sized portions.
For a more comprehensive look at company car terms and a full run-down of the company car tax bands for the next three years, take a look at our Company Car Tax Explained article.
Additional rate - this is a rate of tax for the privileged few who earn over £150,000 per year. It means you're eligible for 50% taxation on your earnings.
Basic rate - this refers to the 20% tax rate. In the 2011/2012 tax year it applies to tax payers earning between £0 and £35,000 per year, but not taking into account the personal tax allowance of £7,475.
Benefit in kind (BIK) - this is tax on any benefits an employee receives at work that are not included in a salary. In this case we're talking about a company car.
Emissions - The amount of CO2 (carbon dioxide) emitted from a car's tailpipe. It's measured in grams-per-kilometre and is how both company car tax and vehicle excise duty is calculated.
g/km - the level of CO2 emitted by a car's exhaust pipe.
Higher rate - This applies for tax payers earning between 35,001 and £150,000 per year, and is set at 40%.
AMAP rate - Approved Mileage Allowance Payments (AMAP) rate is a government-set rate of reimbursement for company car drivers using their own cars for business. In 2011/2012 it is set at 45p per mile for the first 10,000 miles, and 25p per mile thereafter.
P11d - Each employee must complete a P11d form annually and send it to the tax office. Part of this form deals with benefit-in-kind allowances, and part of that is company cars.
P11d value - When filling in the P11d form you will be asked to declare the value of your car not including first registration fee or road tax. This is known as your P11d value, and includes things such as RRP, VAT, delivery charge and optional extras.
Personal tax allowance - This is the amount of tax the government says you're allowed to earn before being taxed on it. In the 2011/2012 tax year this is £7,475.
RRP - The Recommended Retail Price (RRP) is the amount car manufacturers think your car is worth. If you've got a heavily-discounted bargain car then it's possible this value may be far higher and you may end up paying much higher tax than you expect.
VED - Vehicle Excise Duty (VED) is what is commonly known as ‘road tax'. It is payable on all cars, and is calculated using CO2 emissions.