Diesel cars

Understanding the Benefit in Kind Supplement for Company Diesel Cars

The benefit in kind (BIK) supplement for company diesel cars is an important consideration for businesses and employees. The government has extended the 3% supplement up to and including the 2020/21 tax year. Understanding how this impacts tax liabilities is essential for businesses providing diesel cars as a company benefit.

What is the Benefit in Kind Supplement?

A benefit in kind (BIK) tax applies when an employee receives a company car for personal use. The taxable value is calculated based on the car’s list price and its CO2 emissions.

For diesel cars, an additional 3% supplement is applied, increasing the tax liability for both employees and employers. The supplement means that diesel cars have a higher BIK percentage compared to equivalent petrol or hybrid models.

Why Has the Diesel Car Supplement Been Extended?

The government introduced the supplement due to the higher nitrogen oxide (NOx) emissions from diesel engines. Although modern diesel vehicles meet stricter emissions standards, the supplement remains in place. The extension up to the 2020/21 tax year means businesses and employees must continue to account for the increased tax liability.

How This Affects Businesses and Employees

• Higher tax bills – Employees using a company diesel car will pay more in tax.
• Increased costs for employers – Businesses pay higher National Insurance Contributions (NICs) on diesel company cars.
• Consider alternative options – Employers may explore electric or hybrid vehicles to reduce tax liabilities.

How We Can Help

At Lewis Brownlee, we offer expert tax advice on benefit in kind for company diesel cars. We can help businesses assess tax-efficient vehicle options. Plus, we offer a free introductory meeting so that you can find out what we do and how we do it before you commit. So, you have nothing to lose and potentially everything to gain!

For guidance, contact us via our contact page today.