Significant changes to the company car tax regime will come into force from April 2012. The next two years’ changes have been legislated before, but Budget 2012 continued the theme into 2014 and beyond.
The key change that will apply as the new regime goes forward is the broadening of the table of tax rates so that it starts at 10% of list price rather than 15%. This involves reducing the lowest emissions rate from 125g/km to 99 g/km. Some drivers – those for example driving the Vauxhall Agillia with emissions of 119g/km will see a tax rise of 40% from April 2012.
While changes from April 2013 have already been announced, this is the full programme of increases up until April 2017:
- From April 2013, the lowest figure on the table will be below 95g/km, with a benefit in kind of 10%, producing a 1% increase for most drivers
- From April 2014, the 10% rate will disappear, with cars emitting less than 95g/km taxed at 11%
- The special 5% rate for cars emitting no more than 75g/km remains until 2015 but is abolished from April 2015. (this is subject to a 3% addition for diesel).
- The 0% rate applying to zero emission cars is abolished from April 2015.
- The resulting Table from 2015 will start at 13% - applying to emissions of up to 94 g/km (16% for diesels), with 14% applying to emissions of 95 – 99 g/km.
- From April 2015, the top rate increases from 35% to 37% - applying to cars emitting 210g/km and above.
- From April 2017 the 3% supplement for diesel cars will be abolished, but there is a further 2% increase in all benefits. At that point, emissions of 0 – 94 will be taxed at 15%, moving up to 37% for a car emitting 200g/km and above.