There is a tax charge when a car is made available to and is available for private use by a director or an employee earning £8,500 a year or more, or to a member of their family or household.

There is a further tax charge if free or subsidised fuel is provided for private use in a company car.

You will pay tax if a company car is made available to you for your private use (this includes commuting) or you are provided with free or subsidised fuel for private use in that car. The tax you pay is broadly determined by three factors:

• The list price of the car plus any accessories
• The CO2 emissions of the car, and
• The fuel type of the car.

For more information about company car tax read our explanation here.

Here CompanyCarDriver provides links to information and guidance for drivers about Inland Revenue tax rules on company cars and company car fuel.

• Employee fact sheet
• Changes in car benefit rules in 2006/07 (pdf)
• Helpsheet IR203 car and car fuel benefits (pdf)
• Advisory fuel rates for company cars including current rates
• Business travel in a private car: Using your own vehicle for work (IR124) and tax relief for expenses for employment form

(Source: Inland Revenue/www.hmrc.gov.uk)

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