Company Cars

As announced on 1 April 2009, new rules for tax relief for business expenditure on cars will apply from 1 April 2009 for corporation tax, or 6 April 2009 for Income Tax. The rate of tax relief for such expenditure will depend on a car’s CO2 emissions.

With effect from 6 April 2011, the threshold for the 15 per cent band of company car tax (CCT) will be reduced by 5g CO2 per km, so that it applies to cars emitting between 121 and 129g CO2 per km. The proportion of a company car’s list price that is subject to tax will increase by 1 percentage point with each 5g per km that its CO2 emissions exceed this threshold, to a maximum of 35 per cent for company cars emitting 225g CO2 per km and above.

From 6 April 2011, the £80,000 cap on the list price of company cars will be abolished, and the full list price of all company cars will be used to calculate the level of benefit tha is taxable under CCT.

Reductions in the proportion of company car list price that is subject to taxation currently available to Euro 4 standard diesel cars registered before 1 January 2006, petrol-electric hybrid cars, road fuel gas-powered cars and E85 biofuel-capable cars will be removed from 6 April 2011.