Employer-provided car changes ahead

  • By Mark Morton
  • 13 November 2014 00:00

From April 2014

Legislation was introduced to increase the appropriate percentage of the list price subject to tax for cars with CO2 emissions of more than 75gm/km by 1% up to a maximum of 35% for 2014/15.

Zero emission cars remain at 0% and ultra-low emissions cars with emissions up to 75gm/km remain at 5%. To summarise, from 6 April 2014 the rules are:

• no CO2 emissions - 0%;• 75gm/km or less - 5%;• 76 to 94gm/km - 11%;• 95gm/km - 12%;• graduated increases of 1% per 5gm/km up to a maximum, including the diesel supplement, of 35%.

From April 2015

The five year exemption for zero emission cars and the lower rate of 5% for ultra-low emission (1-75gm/km) cars will come to an end.From 2015/16 two new bands will provide for a 5% rate for cars with CO2 emissions of 0-50gm/km and a 9% band for cars with CO2 emissions of 51-75gm/km. The rate will be 13% for cars with CO2 emissions of between 76-94 gm/km, 14% for 95-99gm/km, etc. up to a new maximum of 37%.

April 2016 onwards

From April 2016 the Government will remove the 3% diesel supplement so that diesel cars will be subject to the same level of tax as petrol cars.

In 2016/17, the appropriate percentages of the list price subject to tax for the 0-50gm/km band will be 7% and 11% for the 51-75gm/km band. The rate will be 15% for cars with CO2 emissions of between 76-94 gm/km, 16% for 95-99gm/km, etc. up to the new maximum of 37%.

April 2017 onwards

'The appropriate percentage of list price subject to tax will increase by 2 percentage points for cars emitting more than 75 grammes of carbon dioxide per kilometre (gCO2/km), to a maximum of 37%, in both 2017-18 and 2018-19. In 2017-18 there will be a 4 percentage point differential between the 0-50 and 51-75 gCO2/km bands and between the 51-75 and 76-94 gCO2/km bands. In 2018-19 this differential will reduce to 3 percentage points. The differential will reduce further to 2 percentage points in 2019-20 in line with the Budget 2013 announcement. (Finance Bill 2015)'

The simple message is that benefits continue to rise, so ensure that your clients know before buying new company cars.

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