Taxing employers on employee cars is intended to encourage manufacturers and businesses to choose a more fuel-efficient and environmentally friendly vehicle.
Business cars are taxed in reference with the list price of the car but graduate in accordance with the level of its carbon dioxide emissions.
Diesel cars emit less carbon dioxide than petrol cars and so are currently taxed on a lower percentage of the list price than an equivalent petrol car. Diesel cars do, however, emit greater quantities of air pollutants than petrol cars and are therefore a supplement of 3% of the list price generally applies to diesel cars.
The Vehicle Certification Agency produces a free guide to fuel consumption and emission figures for all new cards. Available via http://carfueldata.direct.gov.uk/
Imported cars that are registered after 1998 have no approved Carbon dioxide figure. They are taxed according to engine size.
Tax on private fuel
Further tax is applied when the company car user is supplied with or allowed to claim reimbursement for fuel for private journeys.
There is no additional charge where the employee is solely reimbursed for fuel for business travel.