The company car tax thresholds will tighten further with effect from 6th April 2011 by 5g per kilometre in addition to the 5g change announced last year, which takes effect from 6th April 2010.
The following abbreviated table demonstrates the progressive narrowing of the 15 per cent band which serves to increase the taxation charge for the bands which follow.
The net effect is to increase the company car benefit in kind tax year by year on all vehicles except those emitting 120g CO2 per kilometre or less.
| 2009/10 | 2010/11 | 2011/12 | |||
| Emissions g/km | % P11d value** | Emissions g/km | % P11d value** | Emissions g/km | % P11d value** |
| 120 | 10 | 120 | 10 | 120 | 10 |
| 121 – 139 | 15 | 121- 134 | 15 | 121 – 129 | 15 |
| 140 – 144 | 16 | 135 – 139 | 16 | 130 – 134 | 16 |
* +3% for diesel cars
From 2012/13 the scales will be reviewed, while retaining the incentive to purchase the lowest emitting vehicles. The company car tax bands will be extended so that they increase by 1 per cent with every 5g CO2 per kilometre increase in emissions, in a linear manner from the 10 per cent starting point.
Specific rates and thresholds will be announced in future budgets
Other detail changes from 6th April 2011 include:
Company car tax in 2012
Company car tax will be reformed from April 6, 2012 to further encourage the uptake of low emission vehicles.
Having already announced increases in company car benefit-in-kind tax charges for 2010/11 and 2011/12, the Chancellor will tighten thresholds by a further 5 g/km in 2012/13
As stated in the spring 2009 Budget, the Chancellor will abolish the special 10% benefit-in-kind tax rate for company cars emitting 120 g/km or less, which has been in place since April 2008.
Instead, the 10% tax rate will apply to company cars with emissions up to 99 g/km. Additionally, the system of bands will then increase by one percentage point with every 5 g/km of from 10%.
Author: Lee Sibbald, April 4, 2008
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