Tax rises mean better fleet planning required
11 February 2010
Fleet buyers, business owners and company car drivers should buy their next new company vehicles with the forthcoming and far-reaching changes to the company car tax system very much in mind. That’s the view from Martin Brown, managing director at Fleet Alliance, who says the right vehicle choice could save companies and drivers thousands in additional taxation.
Announced at last year’s Budget and confirmed at the Pre-Budget Statement in December, new rules covering the carbon dioxide banding system increase taxation for the next two years, before a radical change takes effect from April 2012.
At that point, only cars emitting less than 99g/km of CO2 will qualify for the lowest tax rate of 10%.
For 100g/km and over the CO2 bands will then rise in 5% increments, meaning that cars with CO2 emissions of 100g/km to 104g/km will be in the 11% band and so on – see chart.
This tightening of the banding will mean a car currently in the 15% tax band with emissions of between 135-139g/km will see its tax band jump by 3% to 18%.
Some of the biggest losers, however, will be cleaner cars that currently qualify for the 10% rate. For example, a petrol car emitting 118g/km that is currently taxed at the 10% rate would see its liability jump to 14% from 2012/13 when the new regime starts at 100g/km.
By comparison, a petrol car emitting 160g/km of CO2 would see its tax rate rise only 1% from 22% to 23% in 2012/13, while a car emitting 205g/km of CO2 would also see its rate rise from 31% to 32%.
The maximum 35% tax band will apply to vehicles with emissions of 220g/km or more from 2012/13.
The 3% diesel surcharge will apply to all rates, although it is unclear whether this will also apply from 2012-13 onwards.
Careful fleet planning to select the most cost and carbon efficient models for the fleet should be essential in the light of the forthcoming changes, Fleet Alliance believes.
For example, the driver of a petrol-driven company car with a P11D value of £20,000 and CO2 emissions of 118g/km will see his tax bill rise from £400 currently to £560 in 2012/13 as a 20% taxpayer and from £800 to £1120 as a 40% taxpayer. See chart.
For the driver of a petrol-driven company car also with a P11D value of £20,000, but with CO2 emissions of 136g/km, BIK tax rises progressively from £600 now to £720 in 2012/13 for a 20% taxpayer. At the 40% rate, the bill rises from £1,200 to £1,440 over four year – see below:
“The examples above show that carbon-efficient tax planning for company vehicles is going to be of key importance for the next three years to avoid drivers paying excessive BIK tax charges,” said Martin Brown.
To find out how you can plan your fleet policy more effectively in the line of the forthcoming tax changes, please contact Fleet Alliance on 0845 601 8407; email info@fleetalliance.co.uk; or visit the website www.fleetalliance.co.uk
11 February 2010
Fleet buyers, business owners and company car drivers should buy their next new company vehicles with the forthcoming and far-reaching changes to the company car tax system very much in mind. That’s the view from Martin Brown, managing director at Fleet Alliance, who says the right vehicle choice could save companies and drivers thousands in additional taxation.
Announced at last year’s Budget and confirmed at the Pre-Budget Statement in December, new rules covering the carbon dioxide banding system increase taxation for the next two years, before a radical change takes effect from April 2012.
At that point, only cars emitting less than 99g/km of CO2 will qualify for the lowest tax rate of 10%.
For 100g/km and over the CO2 bands will then rise in 5% increments, meaning that cars with CO2 emissions of 100g/km to 104g/km will be in the 11% band and so on – see chart.
% of P11D price |
2009/10 g/km |
2010/11 g/km |
2011/12 g/km |
2012/13 g/km |
10 |
120 |
120 |
120 |
99 |
11 |
N/A |
N/A |
N/A |
100 |
12 |
N/A |
N/A |
N/A |
105 |
13 |
N/A |
N/A |
N/A |
110 |
14 |
N/A |
N/A |
N/A |
115 |
15 |
135 |
130 |
125 |
120 |
16 |
140 |
135 |
130 |
125 |
17 |
145 |
140 |
135 |
130 |
18 |
150 |
145 |
140 |
135 |
19 |
155 |
150 |
145 |
140 |
20 |
160 |
155 |
150 |
145 |
21 |
165 |
160 |
155 |
150 |
22 |
170 |
165 |
160 |
155 |
23 |
175 |
170 |
165 |
160 |
24 |
180 |
175 |
170 |
165 |
25 |
185 |
180 |
175 |
170 |
26 |
190 |
185 |
180 |
175 |
27 |
195 |
190 |
185 |
180 |
28 |
200 |
195 |
190 |
185 |
29 |
205 |
200 |
195 |
190 |
30 |
210 |
205 |
200 |
195 |
31 |
215 |
210 |
205 |
200 |
32 |
220 |
215 |
210 |
205 |
33 |
225 |
220 |
215 |
210 |
34 |
230 |
225 |
220 |
215 |
| 35 | 235 | 230 | 225 | 220 |
This tightening of the banding will mean a car currently in the 15% tax band with emissions of between 135-139g/km will see its tax band jump by 3% to 18%.
Some of the biggest losers, however, will be cleaner cars that currently qualify for the 10% rate. For example, a petrol car emitting 118g/km that is currently taxed at the 10% rate would see its liability jump to 14% from 2012/13 when the new regime starts at 100g/km.
By comparison, a petrol car emitting 160g/km of CO2 would see its tax rate rise only 1% from 22% to 23% in 2012/13, while a car emitting 205g/km of CO2 would also see its rate rise from 31% to 32%.
The maximum 35% tax band will apply to vehicles with emissions of 220g/km or more from 2012/13.
The 3% diesel surcharge will apply to all rates, although it is unclear whether this will also apply from 2012-13 onwards.
Careful fleet planning to select the most cost and carbon efficient models for the fleet should be essential in the light of the forthcoming changes, Fleet Alliance believes.
For example, the driver of a petrol-driven company car with a P11D value of £20,000 and CO2 emissions of 118g/km will see his tax bill rise from £400 currently to £560 in 2012/13 as a 20% taxpayer and from £800 to £1120 as a 40% taxpayer. See chart.
|
2009/10 |
2010/2011 |
2011/2012 |
2012/13 |
Tax band |
10% |
10% |
10% |
14% |
Scale charge |
2,000 |
2,000 |
2,000 |
2,800 |
20% taxpayer |
400 |
400 |
400 |
560 |
40% tax payer |
800 |
800 |
800 |
1120 |
For the driver of a petrol-driven company car also with a P11D value of £20,000, but with CO2 emissions of 136g/km, BIK tax rises progressively from £600 now to £720 in 2012/13 for a 20% taxpayer. At the 40% rate, the bill rises from £1,200 to £1,440 over four year – see below:
|
2009/10 |
2010/2011 |
2011/2012 |
2012/13 |
Tax band |
15% |
16% |
17% |
18% |
Scale charge |
3,000 |
3,200 |
3,400 |
3,600 |
20% taxpayer |
600 |
640 |
680 |
720 |
40% tax payer |
1200 |
1280 |
1360 |
1440 |
“The examples above show that carbon-efficient tax planning for company vehicles is going to be of key importance for the next three years to avoid drivers paying excessive BIK tax charges,” said Martin Brown.
To find out how you can plan your fleet policy more effectively in the line of the forthcoming tax changes, please contact Fleet Alliance on 0845 601 8407; email info@fleetalliance.co.uk; or visit the website www.fleetalliance.co.uk
Phone: 0845 601 8407 | Email: info@fleetalliance.co.uk | Legal information |
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