Helping you understand the changes to vehicle corporation tax
Posted 15-03-2009 at 05:35 AM by Aron Stevenson
From 1st April 2009, important changes are being made to the tax treatment of cars which will impact all organizations that buy, own or lease cars. These changes are the most significant changes to the tax treatment of vehicles since the company car tax was linked to emissions in 2002.
Under the new tax regime, the cost of the car will not determine the taxation treatment; instead it will move to an emissions based system. The corporation tax rules are again divided into three main parts:
• Cars emitting 110 g/km CO2 or less
will continue to receive a 100% first year allowance. This will remain in place until 2013.
• Cars emitting more than 110 g/km CO2 and below 161g/km CO2
will receive a 20% writing down allowance on a reducing balance basis.
• Cars emitting 161g/km CO2 or more
will receive a 10% writing down allowance on a reducing balance basis.
Why are things changing?
The changes are due to the government’s targets to lower CO2 emissions and to encourage consumers and businesses into more environmentally-friendly and fuel efficient vehicles. The Chancellor of the Exchequer, Alistair Darling, has set the agenda to encourage businesses to own and use cars emitting the least amount of CO2 by linking the writing down allowance to the CO2 rating of the vehicle.
Car manufacturers have also been set a target of reducing average emissions of new cars to 130g/km by 2012. The changes aim to simplify the administration process for fleets and reduce fuel and tax bills by encouraging switching to lower emission vehicles.
Clearly, two identically priced cars may cost the same to lease or purchase, but, depending on emissions they could have a dramatically different after-tax cost, particularly as the corporation tax regime is now dependent on CO2 outputs. Vehicle Excise Duty (VED) and the scale charge used for Benefit in Kind (BIK) tax and computing National Insurance contribution calculations have been CO2 based for some years.
Fleet managers and business owners are encouraged to review their existing fleet to see which cars costing more than £12K (expensive cars) would fair more favourably under the new regime.
We are here to help
We understand that the new rules will raise an amount of uncertainty, and will affect the decisions you make about your fleet. To help you re-evaluate your fleet policy, we have many experts across our business that can provide you with further advice and guidance in this area.
For guidance and advice, please do drop me a line I'll be happy to answer any questions you may have.
Aron Stevenson
Source: www.leasingoptions.co.uk - full article can be found here
Reference: 2008 Pre-Budget Report
Always check with an accountant or other tax professional.
Under the new tax regime, the cost of the car will not determine the taxation treatment; instead it will move to an emissions based system. The corporation tax rules are again divided into three main parts:
• Cars emitting 110 g/km CO2 or less
will continue to receive a 100% first year allowance. This will remain in place until 2013.
• Cars emitting more than 110 g/km CO2 and below 161g/km CO2
will receive a 20% writing down allowance on a reducing balance basis.
• Cars emitting 161g/km CO2 or more
will receive a 10% writing down allowance on a reducing balance basis.
Why are things changing?
The changes are due to the government’s targets to lower CO2 emissions and to encourage consumers and businesses into more environmentally-friendly and fuel efficient vehicles. The Chancellor of the Exchequer, Alistair Darling, has set the agenda to encourage businesses to own and use cars emitting the least amount of CO2 by linking the writing down allowance to the CO2 rating of the vehicle.
Car manufacturers have also been set a target of reducing average emissions of new cars to 130g/km by 2012. The changes aim to simplify the administration process for fleets and reduce fuel and tax bills by encouraging switching to lower emission vehicles.
Clearly, two identically priced cars may cost the same to lease or purchase, but, depending on emissions they could have a dramatically different after-tax cost, particularly as the corporation tax regime is now dependent on CO2 outputs. Vehicle Excise Duty (VED) and the scale charge used for Benefit in Kind (BIK) tax and computing National Insurance contribution calculations have been CO2 based for some years.
Fleet managers and business owners are encouraged to review their existing fleet to see which cars costing more than £12K (expensive cars) would fair more favourably under the new regime.
We are here to help
We understand that the new rules will raise an amount of uncertainty, and will affect the decisions you make about your fleet. To help you re-evaluate your fleet policy, we have many experts across our business that can provide you with further advice and guidance in this area.
For guidance and advice, please do drop me a line I'll be happy to answer any questions you may have.
Aron Stevenson
Source: www.leasingoptions.co.uk - full article can be found here
Reference: 2008 Pre-Budget Report
Always check with an accountant or other tax professional.
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