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Company Car Taxes Based On CO2 Emissions From April 2002 For New Cars

The tax charge on a company car is currently based on a percentage of the list price of the car. The percentage will depend on the amount of business miles travelled in the car in the tax year and whether the car will be four years old or more at the end of the tax year . There is also a separate tax charge if an employer provides or pays for free fuel for private journeys. The tax charge is known as the fuel scale charge and is payable in full irrespective of the amount of free fuel provided. The amount will depend on the engine capacity of the car and whether the fuel is petrol or diesel. Employers are also liable to pay Class 1A NICs on these benefits.

From April 2002, there will be a fundamental change in the way company cars are taxed to help to protect the environment. Cleaner, more fuel efficient cars will be rewarded by linking the tax and NICs charge to the car's exhaust emissions, in particular its carbon dioxide (CO2) emissions.

Check The Inland Revenue web site for information and leaflets.

Vehicle Excise Duty is also changing so check DVLA web site for details of the new duties.  The new system charges higher duties on vehicles with higher emissions.

If changing your company car or getting one for the first time you should consider these new changes.