Budget 2009: Changes to company car taxation

Changes to company car taxation from 6 April 2011:• The basic threshold for the 15 per cent band of company car tax will be reduced by 5g/km of CO2, so that this band will apply to cars emitting below 130g/km of C02. • Cars that produce more than 129g/km will see their tax bill increase by 1 per cent for every 5g per km increase in CO2 emissions, to a maximum of 35 per cent. • Discounts currently available Euro 4-standard diesel cars registered before 2006, higher-emitting hybrid cars and alternative fuel company cars will be abolished. • Tax cap of £80,000 will be scrapped meaning company car drivers will pay tax on the full value of their vehicle. • Electric cars will remain in the 9 per cent tax band.Finally from 2012 the Government will remove the 10 per cent tax band for cars emitting 120g CO2 per km or lower.In other news, the first year capital allowance will be doubled to 40 per cent for one year, encouraging businesses to make capital investments.Additionally the Chancellor confirmed a 2 pence per litre rise in fuel duty from September and the reintroduction of the fuel duty escalator in 2010 meaning a further 1p per litre in real terms each year from 2010 to 2013.Changes to this year's VED rates will take effect from 1 May 2009 as announced in the 2008 Pre-Budget report. For more information see TheGreenCarWebsite.co.uk guide.

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