New 20% Tax Band - Will it Apply to Company Cars

New 20% Tax Band - Will it Apply to Company Cars

Didn't find your answer?

We are all aware that from April 2008 the Basic Tax Rate is reduced to 20% from 22% with the lower 10% banding removed.

Will this lower 20% rate now apply to the tax payable on the company car, for example;

Car P11d Value £20,000 at 20% CO2 rating gives £4,000 taxable figure which at

22% is £880
20% is £800

A difference of £80 over the year, not huge I admit but I cannot find any confirmation if this is to be the case or will the Government introduce a "Fiscal Drag" and leave the percentage at the old figure.

Any advice would be appreciated.
Angus (Tax Novice from Leeds)

Replies (2)

Please login or register to join the discussion.

avatar
By thehaggis
10th Mar 2008 18:49

Yes
Income is charged at the lower rate, the basic rate, and then the higher rate.

Whatever Broon said he was giving away by lowering the basic rate, he is recouping by doing away with the lower rate band.

In 2007-08, 4000 taxable income (after allowances) is tax £612.40.
In 2008-09 4000 taxable income will be due tax of £800

Thanks (0)
avatar
By rtrussell01
11th Mar 2008 14:52

New 20% band on company car tax
Hi Angus,
If you have a look at www.comcar.co.uk you will see the 20% calculations shown for all new cars.

Thanks (0)