Company Car Tax Changes – The Facts
The Chancellor’s changes to the existing Company Car Tax Scheme will affect company car drivers and businesses, it is estimated, to the tune of £85million and are due to come into force on and after April 6 2011. The main points of the changes and how they may affect you are as follows:
Vehicle Value Cap
Drivers of luxury cars who have so far benefited from the £80,000 cap will undoubtedly see a steep increase in their tax payments as the cars are evaluated on their true value when the pricing cap is abolished on April 6 2011.
Higher Rate Tax
For those company car drivers whose cars produce 130g/km or above are set to have their tax increase in 2011 by 1% for every 5g/km above the 130g/km limit to a maximum of 35% – This has been seen as many as a ‘stealth tax’ on the average company car driver and whilst it is a move that has been welcomed by environmentalists it has not been so popular with everyone else. This threshold is to be lowered yet again in 2012 to 125g/km, see below.
15% Band Tax
The current basic 15% band threshold will be reduced in 2011 to cars emitting between 121-129g/km – that’s a 5g/km reduction. The current threshold is set at below 135g/km; this move was seen by the government to encourage greener vehicles to be chosen by companies and individuals alike. This will be further reduced in 2012 by another 5g/km meaning that only cars emitting CO2 at 124g/km and under will be taxed at 15% and all those at 125g/km and above will be subject to the 1% for every 5g/km increase rule as above.
10% Band Tax
The current tax band of 10% has a threshold of 120g/km, which was set in 2008 to promote qualifying low emission cars (QUALECs) and also included hybrid, early registered Euro 4 standard diesel, and alternative fuel cars, regardless of their value or emissions, this will now be scrapped and will only apply to those type of cars that have CO2 emissions of 120g/km and below and are valued at below the £80,000 cap. This tax band is set to be scrapped altogether in 2012, specific rates and thresholds are to be announced in future budgets regarding this.
9% Band Tax
Electric cars will continue to enjoy the lowest tax banding at 9%.
Whilst the government have set their stall promoting these changes as good for the environment and therefore beneficial to us all, many businesses and individuals see this as merely hiding behind the ‘green-banner’ and are only in the best interest of the governments dwindling coffers.
FleetDirectory.co.uk want to hear your views on the company car tax reforms, be they from a company or individual perspective. Voice your comments, concerns or congratulations below.
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