CAR TAX GLOSSARY
Glossary of car tax terms
- Additional rate - this is a tax rate for people earning over £150,000 each year, and is payable at 50%.
- Basic rate - for 2011/2012 employees earning under £35,000 a year, a lower rate of tax is payable. With regards to company car tax, they are eligible for a 20% tax rate.
- Benefit in kind (BIK) - this is any benefit which employees receive from employment but are not included in a salary. The obvious example in our case is company cars, which are taxed according to the income of the employee.
- Emissions - the amount of gas the car emits from the exhaust. Measured in terms of CO2 for company car tax purposes.
- g/km - the level of carbon dioxide emitted by a car is measure in grams per kilometre.
- Higher rate - for 2011/2012 an employee earning between £35,001 and £150,000, a higher rate of tax is payable. With regards to company car tax, this means paying 40% tax.
- P11d - this is the form that each employer must fill in annually and send to the tax office.
- P11d value - this is the value of your car including RRP, VAT, delivery and any extras (such as metallic paint or satellite navigation). It does not include road tax or first registration fee.
- Personal tax allowance - this is a sum of money that you're allowed to earn without being taxed upon it. For 2011/2012 this amount is £7,475.
- Recommended retail price (RRP) - this is the amount the car manufacturer thinks its car is worth. It's likely that some RRPs will be very different from the actual price the customer pays for the car thanks to heavy discounting, so be aware that you may end up paying far higher tax on your car than you thought.
- Vehicle Excise Duty (VED) - this is payable on all cars, and is based on the CO2 output of the car in question.
Sourced from www.parkers.co.uk March 2012
Newcastle Upon Tyne
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