APPROXIMATELY HALF of company car drivers and their employers will now find themselves worse off following changes to CO2 emissions bands according to Yorkshire accountancy firm Clough & Company.
Last month the emissions bands, which determine how vehicles are taxed, shifted downwards by 5g/km and all vehicles producing more than 99g/km of CO2 are now subject to higher tax rates.
As part of the changes the previous 10% band now only applies to cars with CO2 emissions between 76g/km and 99g/km and 'qualifying low emission cars' will no longer exist as a separate category.
Nigel Westman, Partner of Clough & Company, explains: “Previously, the 10% tax threshold included vehicles with emissions up to 120g/km of CO2 and we believe that approximately half of company car drivers will now be worse off as a result of these changes.
“Basic rate tax payers will face an annual tax increase of £216 and this will double for higher rate taxpayers. Furthermore, employers will face increased National Insurance Contributions and this could be substantial for those with large fleets of vehicles.
“Research by Lex Autolease also found that 45% of new car orders will continue to fall into the 100g/km to 120g/km tax band and just 8% of new vehicles will be in the 10% band. This suggests that many firms are not taking steps to reduce this burden.”
Under the new rules cars with zero CO2 emissions are still tax exempt and the 5% rate continues to apply for CO2 emissions of 75g/km or less. The 10% rate applies to cars with CO2 emissions between 76g/km and 99g/km and for 100g/km the rate is 11% and rises by 1% per 5g/km up to a maximum of 35% for 220g/km and above.
For further information visit www.hmrc.gov.uk or for details about Clough & Company and its services visit www.clough.co.uk