Company Car Tax in 2008/2009

Changes to the rules for calculating the appropriate percentage from 2008/09 The appropriate percentage is based on the car's approved CO2 emissions figure. There are some supplements and reductions to take account of different fuels.

The rules governing the calculation of the appropriate percentage change in three ways with effect from 2008/09.

The lower threshold, the CO2 emissions figure which determines the appropriate percentage for all cars, is reduced from 140 to 135.

A new '10 percent band' is introduced for cars with a CO2 emissions figure of exactly 120 g/km or lower, the normal rounding does not apply to this figure. They are called 'qualifying low emissions cars' in the legislation, QUALECs for short. Diesel adjustments apply to QUALECs as to all others, but that is all; no other reduction which is available on other cars applies to QUALECs. As a result, the only acceptable figures for the appropriate percentage for QUALECs are 13 percent - cars to which the diesel supplement applies, and 10 percent - all other cars. So there is no misunderstanding, electric-only cars are excluded from these arrangements and retain their net appropriate percentage of 9 percent.

There is a new 2 percent reduction for cars manufactured to be able to run on E85 fuel, a mixture of 85 percent bio-ethanol and 15 percent unleaded petrol. They will be known as type G on forms P46 (car) and P11D. Other cars cannot run on this mixture without damaging the engine.

Car tax rates and VED bandings

This years budget announced the reform of the car tax structure. New bands will be introduced from 2009, to reward drivers of the cleanest cars. There will also be higher first-year rates in 2010, to influence car buying choices.

Changes to VED rates will take effect from 13 March 2008

Pre-graduated VED (registered before March 2001)

Engine size/capacity	Change	New VED rate
1549cc and below	+£5	£120
above 1549cc	+£5	£185

Graduated VED for Private Vehicles (registered from March 2001)

VED Band	CO2 (g/km)	Change	Alternative Fuel Cars	Petrol and Diesel Cars
A	< 100	-	£0	£0
B	101 - 102	-	£15	£35
C	121 - 150	+£5	£100	£120
D	151 - 160	+£5	£125	£145
E	161 - 185	+£5	£150	£170
F	186 - 225	+£5	£195
G*	> 226	+£100	£385	£400

Company Car Tax in 2007/2008

Substantial rises in Vehicle Excise Duty for high-emitting cars, longer-term VED projections and a freeze on the company car tax lower threshold for qualifying cars in 2009/10 were among the announcements in Budget 2007.

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Company Car Tax key facts from Budget 2007

• Existing emissions-based company car tax rules unchanged for 2007/8.
• Minimum carbon dioxide emissions threshold frozen at the 2008/9 level of 135g/km for 2009/10.
• Vehicle Excise Duty for petrol and diesel cars in Band G rises to £300 in 2007/8, and to £400 in 2008/9.
• Nominal £5 VED rise for cars in Bands C-E in each of the next three years; Band F rate to rise by £10 in 2007/8, and £5 in each of the following two years. Band B rate reduces by between £5-£15 in 2007/8.
• Government set charge of £14,400 for fuel benefit charge calculations maintained for 2007/8.
• Extension of the 20p/litre biofuel duty incentive until 2009/10 and extension of the 40p/litre duty incentive on biogas road fuels until 20/11/12.
• 2% company car discount for drivers of cars using E85 high-blend bioethanol fuels from April 2008.
• Fuel duty rise of 2p/litre deferred until October 1st. 
  

Company Car Tax in 2007/2008 Vehicle Excise Duty

(VED) Budget 2007 applied increased rates for Bands C-G and reduced rates for cars in Band B. Petrol and diesel rates are unified and apply from March 22nd 2007.

For the most polluting cars in Band G, the rate rises to £300 in 2007/8, and £400 in £2008/9. For cars in Band B, rates for petrol and diesel cars are reduced to £35, with rates for cars running on ‘alternative’ fuels reduced to £15, with that rate then frozen for the next two years.

Rates for all cars in Bands C-E, cars registered before 2001 and all LCVs will rise by £5 per year in each of the next three years, while the rate for cars in Band F will rise by £10 in 2007/8, and by £5 in each of the subsequent two years.

Taxable percentages of P11D value

% of P11D price to be taxed	CO2 (g/km) 2007/8	CO2 (g/km) 2008/9	CO2 (g/km) 2009/10
10*	–	120	120
15*	140	135	135
16*	145	140	140
17*	150	145	145
18*	155	150	150
19*	160	155	155
20*	165	160	160
21*	170	165	165
22*	175	170	170
23*	180	175	175
24*	185	180	180
25*	190	185	185
26*	195	190	190
27*	200	195	195
28*	205	200	200
29*	210	205	205
30*	215	210	210
31*	220	215	215
32*	225	220	220
33**	230	225	225
34***	235	230	230
35****	240	235	235

Add 3% for diesel. ** Add 2% for diesel. *** Add 1% for diesel. **** Max charge, so no supplement

Company car tax in 2007/8

Budget 2007 confirmed that the threshold for the minimum percentage charge rate for calculating Company Car Tax remains at 140g/km for 2007/8. In 2008/9, the lower threshold reduces to 135g/km for qualifying cars and is frozen at this level for 2009/10. 2008/9 also introduces a new 10% tax band for company cars with CO2 emissions of 120g/km or less. The chart (right) shows taxable percentages of P11D price applicable for 2007/8 and beyond (including the 10% rate). Company car tax: calculating your Benefit in Kind liability in 2006/7

As in 2006/7, the method of calculating your company car tax bill in 2007/8 depends on the car’s P11D price and CO2 emissions, and whether or not it is a diesel.

Emissions figures and environmental compliance status can be obtained from manufacturer information or the Vehicle Certification Agency at www.vcacarfueldata.org.uk/search.

All diesel cars registered on or after January 1st 2006, are liable to a 3% charge on account of diesel’s higher emissions of ‘local’ pollutants.

In 2007/8 a new Audi A3 Sportback 2.0 TDI SE (above), for example, with a P11D price of £20,667 and CO2 emissions of 146g/km, will attract a tax charge of 19% of its P11D value. Thus £20,667 x 19% gives a taxable value of £3,927, equating to a yearly tax bill of £864 (£72 per month) for a 22% tax payer or £1,571 (£131 per month) for a 40% tax payer.

VED Bands and rates in 2007/8: cars

VED Band	CO2 emmisions	Alternative fuel cars	Petrol cars	Diesel Cars
A	Up to 100g/km	£0	£0	£0
B	101 – 120g/km	£15	£35	£35
C	121 – 150g/km	£95	£115	£115
D	151 – 165g/km	£120	£140	£140
E	166 – 185g/km	£145	£165	£165
F	Over 185g/km	£190	£205	£205
G*	Over 225g/km	£285	£300	£300

Annual VED payable from March 22nd 2007. *Applies to new cars registered from March 23rd 2006

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