Higher Charges For Company Cars
The taxable benefit charged for the non-business use of company cars is set to increase from 6 April 2010, and again in 2011 and 2012. The tax on free fuel for private journeys in cars and vans will also increase from 6 April 2010. The aim of these changes is to encourage employees chose company cars with lower CO2 emissions or even go electric.
Example
The benefit of driving a car with CO2 emissions of 160g/km is currently taxed at 20% of the vehicle's list price. From 6 April 2010 the benefit for the same car will be taxed at 21% of its list price. The taxable amount of the vehicle's list price continues to increase by 1 percent point each year, although the maximum taxable benefit for even the most polluting cars will continue to be capped at 35% of the list price. The taxable benefit of driving a company car with CO2 emissions of 120g/km or less is currently only 10% of the list price, but from 6 April 2012 the car will have to have CO2 emissions of less than 100g/km to fall into the 10% band. The good news is that the drivers of all purely electric cars or vans will not be taxed on a car benefit for five years from 6 April 2010.
Fuel
The fuel benefit for an non-electric vehicle is calculated as the relevant percentage of list price applied to a fixed value of £16,900. From 6 April 2010 this fixed value is raised to £18,000. Hence the taxable benefit of having free fuel for a car with CO2 emissions of 160 g/km will increase from £3,380 to £3,780. The taxable benefit charged when fuel is provided for private use in a company van will increase from 6 April 2010 from £500 per year to £550 per year.
The only way to save tax in the future with a company car is to use an electric vehicle!