Car tax hike could hit SME owners
Jan 12 2012
Business owners should be aware of a new emission scale for company cars
A new emissions scale for company car tax could mean hefty increase in charges for many, warns an accountant.
From 6 April 2012 an income tax charge (and Class 1A national insurance liability) will be applied for the private use of a company car on 10 per cent of the car’s list price where a car has CO2 emissions from 76g/km to 99g/km, rising by 1 per cent per 5g/km band, to the maximum of 35 per cent.
Christina Nawrocki of Wellers Accountants says, ‘If you have a company car with CO2 emissions of 120g/km, this could result in a 50 per cent increase in the tax payable or 40 per cent if the emissions are between 115 and 119g/km.'
The new charge means that a car with a list price of £12,000 could face a charge of £480 even with CO2 emissions below 120g/km based on a 40 per cent income tax rate.
There will also be a further increase, albeit of just 1 per cent of the list price, for vehicles with CO2 emissions of between 95 and 219 g/km in 2013/14.
Nawrocki adds that because of the new rules, it is essential to review the company car you either provide as an employer or drive as an employee.
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