Every U.K. business that provides company cars for its employees or managers, including directors of a public company, is subject to the national company car tax. A tax penalty is assigned to every company car based on its manufacturer, model and year. Cars with high initial value or significant carbon dioxide emissions are subject to heavier taxes than cars with low value and emissions. Any car given to an employee making more than £8,500 is a taxable company car.
Download and print the HM Revenue and Customs form titled "P11D Working Sheet 2 Car and Car fuel benefit 2009-10" (see Resources). Print a copy of this form for each taxable company car.
Record each car's basic information on its own copy of form P11D. List the recipient employee's name and his National Insurance number along with the car's manufacturer, year, model and registration date in the appropriate spaces.
Find the car's listed value as published by its manufacturer on the day before its registration by contacting the car's manufacturer or local distributor. Include the value of any non-standard accessories as you write the listed value on form P11D.
Calculate the car benefit charge by reconciling employee contributions with the listed price. Record the amount of capital each employee contributed toward the purchase of a company car up to a maximum of £5,000. Subtract this amount from the listed value of the car to determine its benefit charge.
Complete the table on page 2 by entering the car's registration, fuel and emission information in the space provided. This table determines the car's carbon emission tax, which represents the acceptability of its emissions.
Multiply the car's final taxable value (Step 4) with its carbon emissions percentage tax. Multiple the resulting number with the employee's tax rate, either 22 per cent or 40 per cent, as of 2010. Add the resulting number with the tax amounts for all other company cars to find your total company car tax.