The Government has introduced changes to the Benefit-in-Kind system in an effort to encourage the use of low CO2-emitting vehicles.
Primarily affecting those driving cars emitting less than 75g/km, there’s a pair of new company car tax bands set to be bought in from April 2015.
The first is for cars emitting between 0 and 50g/km, and those cars will be in for company car tax at 5% in 2015/2016, rising to 7% in 2016/2017.
Secondly, cars emitting between 51g/km and 75g/km will incur tax at 9% for 2015/2016, rising to 11% in 2016/2017.
In 2017/2018 there is going to be 3% difference between the two new tax bands, while in 2018/2019 and 2019/2020 there will be a 2% difference between the two and between 51-75g/km and 76-94g/km bands.
The changes will affect only those cars which emit very low CO2 levels. The Volvo V60 Plug-in Hybrid with its 8% tax for this year will be taxed the same each year until April 2016, at which point its tax will rise to 10%.
Also announced was the fact that from now on the Government will be giving Benefit-in-Kind taxation figures at least three years in advance.
In terms of fuel, the 1.89 pence per litre hike planned for September 1 was scrapped.
The thresholds for the tax levels have changed too, and now the 20% basic rate tax is for those earning between £1 and £32,010 per year. Higher 40% tax is payable by those earning between £32,011 and £150,000 per year. Those lucky enough to be earning over £150,001 per year will still have to pay 50% as before.
The Basic Personal Allowance has also risen to £9,440.
Company car tax for the coming years now looks like this:
% of P11d | 2012/13 | 2013/14 | 2014/15 | 2015/16 | 2016/17 |
Price | CO2 (g/km) | CO2 (g/km) | CO2 (g/km) | CO2 (g/km) | CO2 (g/km) |
0 | 0 | 0 | 0 | N/A | N/A |
5 | 1-75 | 1-75 | 1-75 | 0-50 | N/A |
6 | N/A | N/A | N/A | N/A | N/A |
7 | N/A | N/A | N/A | N/A | 0-50 |
8 | N/A | N/A | N/A | N/A | N/A |
9 | N/A | N/A | N/A | 51-75 | N/A |
10 | 76-99 | 76-94 | N/A | N/A | N/A |
11 | 100-104 | 95-99 | 76-94 | N/A | 51-75 |
12 | 105-109 | 100-104 | 95-99 | N/A | N/A |
13 | 110-114 | 105-109 | 100-104 | 76-94 | N/A |
14 | 115-119 | 110-114 | 105-109 | 95-99 | N/A |
15 | 120-124 | 115-119 | 110-114 | 100-104 | 76-94 |
16 | 125-129 | 120-124 | 115-119 | 105-109 | 95-99 |
17 | 130-134 | 125-129 | 120-124 | 110-114 | 100-104 |
18 | 135-139 | 130-134 | 125-129 | 115-119 | 105-109 |
19 | 140-144 | 135-139 | 130-134 | 120-124 | 110-114 |
20 | 145-149 | 140-144 | 135-139 | 125-129 | 115-119 |
21 | 150-154 | 145-149 | 140-144 | 130-134 | 120-124 |
22 | 155-159 | 150-154 | 145-149 | 135-139 | 125-129 |
23 | 160-164 | 155-159 | 150-154 | 140-144 | 130-134 |
24 | 165-169 | 160-164 | 155-159 | 145-149 | 135-139 |
25 | 170-174 | 165-169 | 160-164 | 150-154 | 140-144 |
26 | 175-179 | 170-174 | 165-169 | 155-159 | 145-149 |
27 | 180-184 | 175-179 | 170-174 | 160-164 | 150-154 |
28 | 185-189 | 180-184 | 175-179 | 165-169 | 155-159 |
29 | 190-194 | 185-189 | 180-184 | 170-174 | 160-164 |
30 | 195-199 | 190-194 | 185-189 | 175-179 | 165-169 |
31 | 200-204 | 195-199 | 190-194 | 180-184 | 170-174 |
32 | 205-209 | 200-204 | 195-199 | 185-189 | 175-179 |
33 | 210-214 | 205-209 | 200-204 | 190-194 | 180-184 |
34 | 215-219 | 210-214 | 205-209 | 195-199 | 185-189 |
35 | 220+ | 215+ | 210+ | 200-204 | 190-194 |
36 | N/A | N/A | N/A | 205-209 | 195-199 |
37 | N/A | N/A | N/A | 210+ | 200+ |
(The above table doesn’t show the 3% diesel surcharge. For all cars using diesel, please add 3% onto the value you get from the table)