SE23495 - Car benefit from 2002/03 onwards: calculation for diesel car approved to Euro IV limits (fuel type L): example

From 6 April 2002, the car benefit charge is calculated by multiplying the ‘price of the car’ by the ‘appropriate percentage’ based on the car’s carbon dioxide (CO2) emissions.

This example shows how to do the calculations explained at SE23370.

In the following example the basic car benefit charge may be reduced if the employee has to pay for private use of the car ( SE23530 onwards) or if the car is unavailable for part of the year ( SE23500 onwards).

Example 1: Euro IV diesel car with a low approved CO2 emissions figure

• Price of the car for tax purposes is £15,000.
• Approved figure of CO2 emissions is 153g/km.
• Round 153 down to 150.
• Look up the appropriate percentage for 150g/km in the ready reckoner at SE23380.

2002/03 and 2003/04

• Appropriate percentage is 15% as 150 is below the 165g/km and 155 g/km lower thresholds for those years.
• Add 3% diesel supplement, so the appropriate percentage becomes 18%.
• Cancel diesel supplement of 3% added at previous step
• Basic car benefit charge is £15,000 x 15% = £2,250.

2004/05

• Appropriate percentage is 16% as 150 is above the 145g/km lower threshold for the year.
• Add 3% diesel supplement, so the appropriate percentage becomes 19%.
• Cancel diesel supplement of 3% added at previous step
• Basic car benefit charge is £15,000 x 16% = £2,400.

Example 2: Euro IV diesel car with a high approved CO2 emissions figure

• Price of the car for tax purposes is £20,000.
• Approved figure of CO2 emissions is 242g/km.
• Round 242 down to 240
• Look up the appropriate percentage for 240 g/km in the ready reckoner at SE23380.

2002/03

• Appropriate percentage is 30%
• Add 3% diesel supplement, so appropriate percentage becomes 33%.
• Cancel diesel supplement of 3% added at previous step
• Basic car benefit charge is £20,000 x 30% = £6,000

2003/04

• Appropriate percentage is 32%
• Add 3% diesel supplement, so appropriate percentage becomes 35%.
• Cancel diesel supplement of 3% added at previous step
• Basic car benefit charge is £20,000 x 32% = £6,400

2004/05

• Appropriate percentage is 34%.
• Diesel supplement restricted to 1%, because the appropriate percentage cannot exceed the maximum of 35%.
• Cancel diesel supplement of 1% added at previous step
• Basic car benefit charge is £20,000 x 34% = £6,800

For examples on diesel cars not approved to Euro IV limits (fuel type D) see SE23491.