+44 (0)1923 212 687
Employees
The taxable benefit on most company cars will increase slightly for 2008/09, because the level of CO2 emissions on which the minimum 15% charge is based drops to 135g/km from 140g/km. This means that the charge for most cars will increase by 1% of the original list price – unless they were already on
the maximum (35%), or are still below the minimum. 3% is still to be added to the CO2-based figure for diesel cars. Cars with an emissions rating of up to 120g/km will now qualify for a special low tax charge of only 10% of the list price.
There will be a more significant increase in the tax charge on the benefit of free fuel provided by an employer for private motoring in a company car. The same percentage rate applies as for the car benefit itself, but the fixed figure it is multiplied by rises from £ 14,400 to £ 16,900. The taxable benefit on a car with a 135g/km rating has therefore risen from £2,160 to £2,535, and the maximum benefit has risen from £5,040 to £5,915 (a 17% increase).
Over the next few years, there will also be changes in vehicle excise duty and other measures to encourage the use of lower emission cars.
TAX TIP
Consider the future tax rates when choosing a company car
Car Benefit Assessment 2008/09
Charge based on a percentage of the initial list price of the car; the percentage depends on the carbon dioxide emission ratings of the car, if it has one. For older cars without a rating, the percentage depends on engine capacity.
For 2008/09 the percentage for a petrol engine is 15% for ratings from 121g/km - 135g/km.
The percentage increases by 1% for every complete 5g/km in excess of this (i.e. at 140,145 etc), to a maximum of 35%. Diesel cars have 3% added to this figure, but still have a maximum percentage of 35%.A new lower rate of 10% (13% diesel) is available for cars with a rating up to 120g/km.
Car Fuel Assessment
The benefit is calculated using the same percentage as that used for the car benefit, applied to a standard figure of £16,900 (2007/08: £14,400).
The taxable amount is therefore between £1,690 (10% – min.) and £5,915 (35% – max.).
Tax free mileage allowance
Higher Rate Lower Rate
All cars 40p 25p
Motorcycles 24p 24p
Bicycles 20p 20p
Business passengers 5p 5p
Higher rate allowed up to 10,000 business miles
Fuel-
Up to 1400cc 11p 11p 7p
1401 -
Over 2000cc 19p 14p 11p
See the rates from 1/7/08
Company vans
The tax increases on company vans which took effect from 6 April 2007. If private use is more than home-to-work travel, the taxable benefit is £3,000. If fuel is provided for that private use, a new tax charge arises on £500.
Tax TIP:Don’t get caught by the charge on vans- rule out private use apart from home-to- work
Fuel scale rate charges
Since 1 May 2007, the scale rate which must be applied by a business which provides fuel for its employees to use for their private motoring has depended on the CO2 emissions rating of the car. The charge is not the result of a simple formula as for the income tax charge, and individual figures have to be looked up in a table.
Enterprise Management Incentives
This tax-favoured employee share option scheme has up to now been restricted to shares with a value of £ 100,000 and companies with a gross asset value of up to £30m. For options granted from 6 April 2008, the value limit rises to £ 120,000. A new restriction on the size of the company – fewer than 250 employees – will apply from Royal Assent to the Finance Act, probably at the end of July