Understanding
Benefit in Kind Tax
SalarySacrifice4Cars (SS4C) is a tax efficient way to enjoy a
fully budgeted motoring experience, saving Income Tax &
National Insurance on the Salary being sacrificed.
Under the SalarySacrifice4Cars Scheme you are liable for ‘Benefit in Kind’ (BIK) tax as your vehicle
is being provided as a benefit by your Company. BIK tax for cars is based upon the P11d value of the
car, it’s CO² emissions and the drivers income tax band.
P11d Value
The P11D value is the cost of the vehicle including all the manufacturer options and any other extras
so, as the vehicle cost increases so does the tax liability.
CO² Emissions
This is the rate of Carbon Dioxide (CO²) the vehicle emits.
Benefit-in-kind tax for company cars is based on the approved CO² emissions for your vehicle.
Drivers pay tax (20% 40% or 50% dependent on your income tax band) on a percentage of the value
of the car based on a table of CO² emission figures (shown on the next page). So the more you
pollute, the more you pay.
The Benefit in Kind tax is fully detailed in the Net Cost to Employee figure on every SS4C quotation.
Company Car Tax Bands
Taxable
petrol
Taxable
diesel
5%
10%
11%
12%
13%
14%
15%
16%
17%
18%
19%
20%
21%
22%
23%
24%
25%
26%
27%
28%
29%
30%
31%
32%
33%
34%
35%
8%
13%
14%
15%
16%
17%
18%
19%
20%
21%
22%
23%
24%
25%
26%
27%
28%
29%
30%
31%
32%
33%
34%
35%
35%
35%
35%
2011-12 tax year
up to 75
76-120
121-129
130-134
135-139
140-144
145-149
150-154
155-159
160-164
165-169
170-174
175-179
180-184
185-189
190-194
195-199
200-204
205-209
210-214
215-219
220-224
225+
CO² in g/km
2012-13 tax year
up to 75
76-99
100-104
105-109
110-114
115-119
120-124
125-129
130-134
135-139
140-144
145-149
150-154
155-159
160-164
165-169
170-174
175-179
180-184
185-189
190-194
195-199
200-204
205-209
210-214
215-219
220+
2013-14 tax year
up to 75
76-94
95-99
100-104
105-109
110-114
115-119
120-124
125-129
130-134
135-139
140-144
145-149
150-154
155-159
160-164
165-169
170-174
175-179
180-184
185-189
190-194
195-199
200-204
205-209
210-214
215+
The Benefit in Kind tax is calculated in the following way:
P11d value x vehicles CO² percentage (as shown in the above chart) x your income tax band.
Divide by 12 for the monthly amount of Benefit in Kind.
Example Benefit in Kind Calculation
Vehicle
P11d Value
CO² Emissions
Fuel Type
£22,870 x
£2,973.10 x
Monthly BIK
BMW 118d SE 5 Door
£22,870
119 g/km
Diesel
13%
20% (personal tax rate)
Taxable Rate = 13%
= £2973.10
= £594.62 BIK per annum
= £49.55 BIK per month
PAYE Coding Notice
Following delivery of your SS4C vehicle your employer will notify your local tax office of the benefit
and relevant vehicle information to calculate the taxable benefit. The tax office in turn will issue you
with a PAYE Coding Notice (example below) to inform you of your new Tax Code after having taken
this benefit into account. Please note that the Coding Notice will detail the total taxable benefit
amount (THIS IS NOT THE AMOUNT OF TAX YOU PAY). To translate this into the Benefit in
Kind amount simply multiply the amount shown by your personal tax rate (20%, 40% or 50%
dependant upon salary) and divide by 12 for the monthly amount. This amount may also be pro-rated
if a vehicle is taken part way through the year. It can sometimes take your local tax office several
months to issue a PAYE Coding Notice so it is always best to chase them for it shortly after delivery
of your vehicle to avoid possibly receiving a BIK charge of several months all at once.
SalarySacrifice4Cars is a trading name of Tuskerdirect Ltd who is an Appointed Representative of ITC Compliance and are authorised and regulated by the Financial Services
Authority. Registered in England & Wales no: 03864648. Registered office: 3 George Street, Watford, Hertfordshire WD18 0UH