Value of Vehicle used by employee

[Mike C]

Hi all - in the past the Value used for calculating the Employee's use of a company vehicle was the original cost including VAT. (That's how I understood it anyway).

In the latest budget speech, it was proposed that it now be the "Retail Market Value" of the vehicle.

Is this correct and, if so, when does this come into effect?

[Christel]

Hi there,
As far as I know it has not changed since 1 March 2011. So you would still use the Taxable value of 3.5% per month on the cash vehicle cost, incl. VAT, but excluding finance charges, interest, and sales tax. The taxable value is reduced to 3.25% per month where there is an approved maintenance plan in place.
Market value is used where the employer did not physically buy the car, i.e. it was obtained as a gift or sponsorship. In this case you use the market value.

I will double check the above on Thursday and update this post - I'm attending a PAYE tax update course by Rob Cooper.