Company car tax changes

There is another change to company car taxation due in April.

2012/13 will see the introduction of a new set of company car tax scales originally announced a while ago by the then-Chancellor Alistair Darling. No, that’s not an error: the change was revealed as part of the 2009 Pre-Budget Report and legislated for in the following year’s Finance Act.

At present, the tax rules are relatively generous for cars with CO2 emissions of up to 120g/km: the taxable benefit is generally 10% of list price (13% for diesels). Immediately above the 120 g/km level the benefit percentage jumps up to 15% (18% for diesels). From 6 April 2012, this step change will disappear and, at the same time, all thresholds will be moved down by 5g/km. The result will be that if you have a car with emissions of 120g/km or slightly less, your company car tax bill will jump. For example, the taxable value of a BMW 318d ES, which has emissions of 119g/km and a list price of £25,325, will rise from £3,292 to £4,305.
The same proportionate increase will apply to fuel scale charges, making ‘free fuel’ generally unattractive for low emission cars.