PAS Notes

Graham Whitehouse

Most company car drivers of low emission vehicles to pay more tax from 2012/13

By Graham Whitehouse | 25 January 12 | In: Tax News

Car CO2 Emissions

Drivers of a low emissions company car could face tax increases of up to 60% as HMRC removes flat charge on low emission cars.

In 2008/2009 low emission company cars were defined by HMRC as QUALECs i.e. Qualifying Low Emission Cars. These were any company cars that emitted no more than 120g/km of CO2. To encourage take up of QUALECs, they enjoyed a preferential 10% benefit charge to the price of the company car for tax purposes that would be declared on the P11D form.

For 2010/2011 and 2011/12 a further reduction to 5% benefit charge was allowed if the QUALEC was very low emission i.e. between 1 and 75g/km of CO2.

However from 2012/13 onwards QUALECS will no longer receive a flat 10% charge if they fall between 76g/km to 120g/km of CO2. Instead the appropriate percentage is being staggered in incremental steps between 15% and 10% according to the following table:-

CO² emissions (g/km) 2011-12 2012-13 2013-14 onwards
1-75 (unrounded) 5% 5% 5%
76-94 10% 10% 10%
95 10% 10% 11%
100 10% 11% 12%
105 10% 12% 13%
110 10% 13% 14%
115 10% 14% 15%
120 10% 15% 16%
121-124 (unrounded) 15% 15% 16%
125 15% 16% 17%
130 16% 17% 18%
135 17% 18% 19%
140 18% 19% 20%
145 19% 20% 21%
150 20% 21% 22%
155 21% 22% 23%
160 22% 23% 24%
165 23% 24% 25%
170 24% 25% 26%
175 25% 26% 27%
180 26% 27% 28%
185 27% 28% 29%
190 28% 29% 30%
195 29% 30% 31%
200 30% 31% 32%
205 31% 32% 33%
210 32% 33% 34%
215 33% 34% 35%
220 34% 35% 35%
225 35% 35% 35%
230 35% 35% 35%

This represents an up to 60% increase in the amount of tax the driver would have to pay in just over two years.

NB The appropriate percentage charge across the whole range of CO2 emissions is subject to an additional 3% supplement if the vehicle is powered by diesel fuel.

Year Price Percentage Benefit 20% Tax 40% Tax 50% Tax
2011/12 £15,000.00 10% £1,500.00 £300.00 £600.00 £750.00
2012/13 £15,000.00 15% £2,250.00 £450.00 £900.00 £1,125.00
2013/14 £15,000.00 16% £2,400.00 £480.00 £960.00 £1,200.00

This represents an up to 60% increase in the amount of tax the driver would have to pay in just over two years.

NB The appropriate percentage charge across the whole range of CO2 emissions is subject to an additional 3% supplement if the vehicle is powered by diesel fuel.