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Updates from the Clayton & Brewill team.

Company car tax – time to go green?

30th June, 2015

If you are an employee or a director you will have received your tax coding notice. You may have seen that the estimated company car benefit has increased by more than usual – even if you haven’t actually changed your car. Clayton & Brewill’s Yvonne Jackson explains the increase.

Most cars are taxed relating to bands of CO2 emissions. The percentage applied to each band has typically gone up by 1% each year, with an overriding maximum charge of 35% of the list price of the car.

This year, the bands have gone up by 2% and the maximum charge is increased to 37%. So a petrol car with a list price of £30,000 and CO2 emissions of 135, will see an increase in the taxable benefit from £6,000 to £6,600.

These substantial increases may encourage businesses to consider changing their company cars for those with lower CO2 emissions.

What does the future hold for company car tax?

Unfortunately it won’t get much better! From 6 April 2016 there will be a further 2% increase in the percentage applied to each band, with similar increases in the following two years. For 2019/2020, the increase will by 3%.

So, if the same car is still owned in 2019/2020, the car benefit will be £9,300 – even though the vehicle is nine years old!

Better news for diesel cars

There is a small bit of good news on the horizon for diesel cars.The 3% supplement to the percentages will be removed from 6 April 2016.

For help with understanding the tax implications relating to company cars, please contact Yvonne Jackson by email or call the Clayton & Brewill office on 0115 950 3044.

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