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Budget 2012 - Company cars

The Chancellor has continued the policy of higher taxation for more polluting cars in an effort to persuade motor manufacturers to produce more fuel efficient cars. The key changes are:-

  • From April 2013 the current 18% capital allowance for cars with CO2 emissions up to 160g/km will apply only to cars with CO2 up to 130g/km. Above these limits the allowance is 8%, meaning that it will take far longer to obtain tax relief for cars caught by this change.
  • Vehicle Excise Duties will increase from April 2012 for cars with CO2 emissions more than 110 g/km.
  • The 100% “low emission” capital allowance for cars with emissions up to 110 g/km has been extended by 2 years to April 2015 - but this will now only apply for those cars with emissions below 95 g/km.
  • Employee car tax will increase for all cars from April 2015, in particular for cars with CO2 emissions up to 94 g/km, where a charge will be introduced for the first time at a rate of 13% (16% diesel) of manufacturer’s list price.
  • From April 2014, a taxable car benefit will be introduced for cars with CO2 emissions of between 1-75 g/km at 5% (8% diesel). Until now, these cars have not been caught by these rules.
  • From April 2014, the appropriate percentage of the list price subject to tax will increase by one percentage point for cars emitting more than 75g CO2 per km, to a maximum of 35 per cent.
  • From April 2015, the percentage benefit applied to the manufacturer’s list price will be increased by two percentage points to a maximum of 37%. The current maximum is 35%.
  • From April 2012, fuel benefit scale charges, for all cars, will be based on a price of £20,200. This is an increase from £18,800.
  • A small crumb of comfort – for some drivers - is the removal of the three percentage diesel supplement from April 2016.



Date: 21st March, 2012
Author: Mercer & Hole Media


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