Tips and advice

Vehicle costs glossary

From company car tax to your pence-per-mile bills, we help you through all of your vehicle costs

Benefit in Kind (BiK): A tax paid by employees who receive perks or benefits in addition to their salary, such as a company car. Every car has a Benefit in Kind (BiK) rating that's based on CO2 emissions and the car's P11D value.

Company car tax: The amount of tax you'll pay to drive a company car. The amount you pay is based on the P11D value of the car and the BiK banding which is based on emissions.

Depreciation: The amount of value your car will lose over time. Depreciation is usually expressed as a percentage of the original value that's retained after three years and 36,000 miles. It's a useful way of comparing the value one car will retain compared to another. Remember that the the official depreciation percentage doesn't take into account any optional extras you pay extra for. All future values will depend on the vehicle's condition, the desirability and demand for that model, how it's been maintained and its mileage.

MoT: The test and certificate system that's used to ascertain the roadworthiness of a car. It is illegal to drive a car on public roads without a valid MoT certificate displayed. Follow our MoT checklist and help your car pass first time.

P11D: A tax form completed by your employer and send to the tax office that outlines the value of your benefits, including your company car. Your car's P11D value takes into account its list price plus optional extras including VAT and delivery charges, but doesn't include the car's road tax or first registration fee.

PPM (Pence Per Mile): The amount of money it costs to run a car per mile, factoring in variables such as purchase price, fuel economy, depreciation, road tax, mileage and servicing and maintenance.

Residual value (RV): See depreciation

Road fund licence/road tax: The annual tax that's dictated on the CO2 emissions of your car over a kilometre-long drive. Cars that emit less than 100 grams per kilometre of CO2 are exempt from road tax. Also known as VED. Find out what tax band your car falls into, by reading our round-up of current car tax bands.

Tax band: A category that dictates your VED tax fee. For more information, see CO2 and VED, or read our tips and advice on car tax bands.

V5C: The official document distributed by the DVLA that's used to provide proof of ownership of a car.

VED (Vehicle Excise Duty): The annual tax that's dictated on the CO2 emissions of your car over a kilometre-long drive. Cars that emit less than 100 grams per kilometre of CO2 are exempt from VED. Find out how much your new car will cost you, by taking a look at our explanation of current car tax bands.

WLC (Whole life cost): The overall amount of money a car costs over an ownership period, from initial purchase to resale time/disposal at the end of the car's working life.

Richard is a former editor of Carbuyer, as well as sister site DrivingElectric.com, and he's now Deputy Editor at Auto Express. Having spent a decade working in the automotive industry, he understands exactly what makes new car buyers tick.

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