REV BN 41: Company Car Tax
Who is likely to be affected?1. Employees provided with a car that is available for their private use, and employers who bear Class 1A National Insurance on the taxable benefit of a provided car and fuel. General description of the measure2. Setting the company car tax charge for 2006/07 and the company car fuel charge for 2004/05. Operative date3. 6 April 2006 – company car tax 4. 6 April 2004 – company car fuel tax Current law and proposed revisionsCompany car tax5. Where a car is made available for an employee’s private use a taxable benefit arises. Since April 2002 the taxable benefit has been calculated by applying a percentage to the list price of the car. The percentage is related to the CO2 emissions of the car and ranges from 15% to 35% (in 1% increments) for a petrol car. Diesel cars that do not meet Euro IV emissions standards attract a 3% supplement on the petrol percentages (capped at 35%). Cars that run on alternative fuels attract discounts to the petrol percentage. The CO2 emissions qualifying for the minimum petrol percentage charge have been set as follows:
6. To provide continued certainty of the tax charge for the next three years the level of CO2 emissions qualifying for the minimum petrol percentage (15%) will be frozen at 140 grams per kilometre in 2006/07. Company car fuel7. An additional taxable benefit arises if the employee receives free fuel for the company car for their private use. The taxable benefit calculation was reformed in April 2003 to align the charge with the environmental principles of the company car tax system. Since April 2003 the fuel benefit charge has been calculated by applying the company car tax appropriate percentage to a set figure. In 2003/04 the set figure was £14,400. 8. For 2004/05 the set figure for the company car fuel benefit charge will be frozen at £14,400. Further advice9. If you have any questions about this change, please contact your local Inland Revenue tax office.
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