13 Sep 01
Company car drivers, with one eye on their wallets and the other on their image in the corporate car park, have to make some tough decisions. And, since more than half of cars registered in the UK are fleet vehicles, it's more important than ever that everyone knows the score when it comes to tax penalties. Major changes to company car taxation came into force in April 2002 and, like every tax change, created winners and losers.
The new tax system replaced incentives to clock up business miles with incentives to choose green cars. Under the old system, tax was payable at 25 percent if you did over 2500 business miles, or 15 percent if you beat the magic 18,000-mile threshold. Under the new, emissions-based system, cars registered 2004-2005 emitting less than 145g/km of carbon dioxide have a tax liability on 15 percent of their list price (18percent for diesel models, unless they meet the Euro IV emissions standards which become mandatory in 2006), and this percentage rises by one point for every 5g/km up to a maximum of 35 percent (or 245g/km).
This sliding scale will tighten in subsequent years by 5g/km a year to encourage drivers to select cars with lower emissions of CO2 - the worst greenhouse gas. For example, a petrol car that currently emits 160g/km of CO2 is liable for 18 percent of its value in duty; come 2006, that the owner of that same car will have to shell out for 19 percent of its value. So it pays to get a green machine.
