Company car tax bands

One of the most important moves towards encouraging greener motoring has been changes to the company car tax regulations.

These were altered back in 2002, to base tax rates around a car’s CO2 emissions. This meant drivers of cars emitting less CO2 paid less ‘Benefit In Kind’ (BIK) tax.

Essentially, a car’s CO2 emissions place it in a band, which gives the percentage BIK tax a driver will pay. The base rate is 10%, for petrol cars producing less than 99g/km of CO2. This lower threshold has been reduced significantly, from 120g/km in 2011-2012.

Company car tax rises by 1% in 5g/km increments, to a maximum of 35% for cars producing 220g/km and above.

Changes in the 2012 budget included an announcement that tax will soon be levied on a higher proportion of a company car's list price, with a 1% rise in 2014/15 and a 2% rise the year after. These increases don't affect cars emitting less than 75g/km, although that basically means every car that isn't electric or part-electric (see below).

Company car tax for diesels

At present, the government imposes a further 3% penalty on diesel-engined cars (up to a maximum 35% liability overall) because diesels emit relatively high levels of small particulates, which are damaging at a local, rather than a global, level. The current base BIK rate for diesel cars is 13%. unsecured loans
However, this 3% supplement will be scrapped from 2016, in recognition of the fact that diesels are getting cleaner and more efficient,
Over the years, the limits for each band have been lowered, giving manufacturers an incentive to produce lower-carbon cars. This has had a profound effect on the cars fleets choose, with diesels now dominating the large car sector.

No tax on electric cars

There is no company car tax on electric cars, meaning big savings for anyone who drives an electric company car or van. Instead of the current minimum 10% benefit in kind (BIK) tax, they pay nothing.
The £5,000 Government subsidy on new electric cars remains until 2015 bad credit loans