On April 1 the bands for company car tax bands will shift. This means the majority of company car drivers will have to pay more Benefit-in-Kind tax. However, some will take a bigger hit than others since some of the bands see a far more dramatic shift.
The cars suffering the worst hit are those emitting between 115g/km and 120g/km of CO2. This year drivers of petrol cars will be in for a 10% charge, but after April 1 this will shoot up to a 14% charge. Diesel cars see the same percentage hike from 13% to 17%.
As an example, let’s study the Volkswagen Golf 1.6 TDi Match 5dr. This car emits 119g/km of CO2, placing it in the area worst affected by the band hike. Its P11d value is £19,840.
For this tax year Benefit-in-Kind tax is payable at 13%, which means £43 per month on the 20% pay scale. However, after April 1 the Benefit-in-Kind taxation will rise to 17%. This pushes the cost up to £56 per month, which is an extra £156 per year or £468 over a three year lease. When you look at it like that it really isn’t cheap.
For the most part, choosing a car emitting a lot more is likely to mean an increase of 1%. Take the Golf R, which emits 199g/km.
With a P11d value of £30,920 and company car tax payable in the 30% band this year, you’re looking at a monthly cost of £309 on the 40% pay scale. This will rise to 31% next year, which works out to £319 or an extra £10 per month. Over a three year lease this means an extra £360.
However, choosing cars with under 99g/km of CO2 is a sensible choice. You won’t see any tax increase after April 1, and the next year you’ll only see a 1% increase if your car emits between 95 and 99g/km. So using our example of the Volkswagen Golf, choosing the 99g/km 1.6 TDi BlueMotion is certainly the way to go to keep your tax bills down.
