Company car tax
The Government has today published a report on what it calls stage two of the company car tax evaluation. To view the report click here.
Vehicle excise duty
The Chancellor heralded the changes as a ‘radical reform’.
Taking effect from tomorrow a zero rate for the small number of cars with the very lowest emissions will be introduced. Instead of £75 for cars with the lowest emissions we will have a ‘significantly lower rate’ of £40.
The Government said 50% of cars will see their VED frozen or reduced in total. It said three million cars will pay VED of £100 or less.
‘Instead of just 300,000 motorists paying £100a year or less, 3 million will now pay £100 or less’ Chancellor Gordon Brown said.
* To work out the VED rate for your car click here.
The Government also announced that the duty differential between LPG and main road fuels will be reduced by 1 pence per litre each year to 2008/09 and that the duty differential between natural gas and main duty rates will be maintained each year until 2008/09.
Capital allowances for cars
The Government is looking at further modernisation of the capital allowances for company cars. Options include incentives for the take up of cleaner cars, including introducing a new car pool with a range of first-year allowances for cars depending on carbon dioxide emissions. This would build on existing 100% first-year allowances for cars with very low emissions and reforms to VED and company car tax.
A consultation document has been published. To view click here.
The background and options:
The Government wants to gain opinions from the fleet industry on modernising tax rules which restrict tax relief on business spend on cars worth more than £12,000.
Currently, the car is not included in the general plant and machinery pool but accounted for separately, in its own pool.
The writing down allowances are restricted to a maximum annual amount of £3,000 and when the car is disposed of, a balancing charge or allowance is likely to be generated.
The Government has considered three options for reforming the current capital allowance rules for cars:
VAT fuel scale charge
The charge, for taxing road fuel when business cars are used for private motoring, is being adjusted with effect from May 1 to reflect changes in fuel prices.
The company car fuel benefit charge calculation figure will be maintained at £14,400 in 2006/07.
And finally, ‘beer and fags’
And a word from the Conservatives
Tory leader David Cameron said he welcomed the changes on carbon emissions because ‘I came up with them’.
He said: ‘In a carbon-conscious world, we have a fossil fuelled Chancellor.’