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Budget 2008 Key Points

  • Introduction of a new 10% band (13% for diesels) for company cars emitting less than 120g/km of Co2

  • Current emission levels to remain the same.

  • Lower threshold reduces to 130g/Km in 2011/12

  • Major reform of Vehicle Excise duty from April 2009

  • VED for petrol and diesel cars in Band G to rise to £400 in 2008/2009

  • VED rate rise by £5 for cars in Bands C-F in 2008/2009

  • VED rate rise of £5 on all LCV’s in 2008/2009

  • Writing down allowance for all cars to be reformed in 2009 in line with Co2 emissions

  • Fuel benefit tax calculation to be increased to £16,900

  • Fuel Duty increase by 2p per litre October 2008-04-15

Company car Tax

The threshold for the minimum percentage charge reduces to 135g/km for 2008/2009 and is frozen until 2010.

In 2011 it reduces to 130g/km

The new 10% tax band for company cars with a Co2 emission of 120g/km or less is applicable from 1st April 2008.

The 3% Diesel surcharge still applied

Taxable Percentage of P11d Value.

% of P11D price to be taxed 2008/2009 CO2 (g/km) 2009/2010 CO2 (g/km) 2010/2011 CO2 (g/km)
10 120 120 120
15 135 135 130
16 140 140 135
17 145 145 140
18 150 150 145
19 155 155 150
20 160 160 155
21 165 165 160
22 170 170 165
23 175 175 170
24 180 180 175
25 185 185 180
26 190 190 185
27 195 195 190
28 200 200 195
28 205 205 200
30 210 210 205
31 215 215 210
32 220 220 215
33 225 225 220
34 230 230 225
35 235 235 230

Capital Allowances (Business cars)

With effect from April 2009 Capital Allowances will be based on Co2 emissions.

Vehicles with a Co2 of 160g/km or less will attract an allowance of 20%

Vehicles with a Co2 greater than 160g/km will attract an allowance of 10%

Expensive Car Leasing Disallowance

The current disallowance for leased cars costing over £12,000 will be replaced by a disallowance based on CO2. From April 2009, cars with CO2 emissions above 160g/km will attract a 15% net disallowance relating to finance payments. For cars with emissions of 160g/km or below there will be no disallowance.

Class 1A National Insurance Contributions

For 2008/2009 the percentage for calculating an employers’ class 1 National Insurance Contributions on a company car remains at 12.8% of the taxable value (based on the P11d value)

Free Fuel Benefit

Employer provided "Free fuel" benefit calculation has been increased to £16,900