Calculating company car tax in 2013/14

  • Our guide to working out how much tax you’ll pay
  • We show you how to factor in optional extras
  • Calculated on a monthly basis for easy budgeting

To view the 2014/15 tax changes click here

Company car tax can be a confusing thing at the best of times, and on April 6 a new set of bands are to be introduced. In this article we’re going to guide you through how to work it out for yourself.

Since most people budget on a monthly basis, we’ll show you how to work out a monthly cost for the tax you’ll pay on your company car. Our example is going to be a BMW 3 Series saloon in 320d M Sport guise.

The first thing to do is to find your car’s P11d value. This is the price the manufacturer quotes for the car including VAT, delivery and all optional extras. It doesn’t include VED or the first registration fee.

Our BMW has a P11d value of £31,355. We’ll assume there aren’t any optional extras fitted, but if there were you’d have to add their value at this point.

Next, you need to find out how much CO2 your car emits and thus how much tax you’ll have to pay. Our 320d emits 120g/km, which as you can see in the table below slots it into the 16% tax band. It’s a diesel, so that means you need to add on the 3% diesel surcharge, making the total amount of tax payable 19%.

So now you need to find out what 19% of £31,355 is: £5,957.45.

At this point you need to know which tax level you’re at. If you’re being paid less than £32,011 each year then you pay tax at 20%, and if you’re being paid between £32,011 and £150,000 per year you’ll have to pay tax at 40%. If you’re lucky enough to be on over £150,000 then you’ll be in for 50% tax.

For or example we’ll assume a 40% tax payer, so we need to work out what 40% of £5,957.45 is. This will give us our annual company car tax bill of £2,382.98.

Finally, we just need to divide that number by 12 to get the monthly tax bill of £198.58.                

So there you have it – that’s how you work out how much company car tax you’ll have to pay in the 2013/14 financial year.

Of course, if you’re going for a car with no optional extras then you can always use the Parkers company car tax calculator to do the number-crunching for you.