Employer-provided car changes ahead

From April 2014

Legislation was introduced to increase the appropriate percentage of the list price subject to tax for cars with CO2 emissions of more than 75gm/km by 1% up to a maximum of 35% for 2014/15.

Zero emission cars remain at 0% and ultra-low emissions cars with emissions up to 75gm/km remain at 5%. To summarise, from 6 April 2014 the rules are:

• no CO2 emissions - 0%;• 75gm/km or less - 5%;• 76 to 94gm/km - 11%;• 95gm/km - 12%;• graduated increases of 1% per 5gm/km up to a maximum, including the diesel supplement, of 35%.

From April 2015

The five year exemption for zero emission cars and the lower rate of 5% for ultra-low emission (1-75gm/km) cars will come to an end.From 2015/16 two new bands will provide for a 5% rate for cars with CO2 emissions of 0-50gm/km and a 9% band for cars with CO2 emissions of 51-75gm/km. The rate will be 13% for cars with CO2 emissions of between 76-94 gm/km, 14% for 95-99gm/km, etc. up to a new maximum of 37%.

April 2016 onwards

From April 2016 the Government will remove the 3% diesel supplement so that diesel cars will be subject to the same level of tax as petrol cars.

In 2016/17, the appropriate percentages of the list price subject to tax for the 0-50gm/km band will be 7% and 11% for the 51-75gm/km band. The rate will be 15% for cars with CO2 emissions of between 76-94 gm/km, 16% for 95-99gm/km, etc. up to the new maximum of 37%.

April 2017 onwards

'The appropriate percentage of list price subject to tax will increase by 2 percentage points for cars emitting more than 75 grammes of carbon dioxide per kilometre (gCO2/km), to a maximum of 37%, in both 2017-18 and 2018-19. In 2017-18 there will be a 4 percentage point differential between the 0-50 and 51-75 gCO2/km bands and between the 51-75 and 76-94 gCO2/km bands. In 2018-19 this differential will reduce to 3 percentage points. The differential will reduce further to 2 percentage points in 2019-20 in line with the Budget 2013 announcement. (Finance Bill 2015)'

The simple message is that benefits continue to rise, so ensure that your clients know before buying new company cars.