CO2 tax chokes drivers

The current company car tax system is structured around mileage-related bands, but from 6 April, it all stops.

Instead, a car will be taxed on its carbon dioxide emissions, measured in grams per kilometre, based on a percentage of its list price for tax purposes (P11D value).

For the majority of drivers – those covering between 2,500-17,999miles per year – the new laws will bring savings, but for drivers of larger and petrol-fuelled cars the £30 extra looks likely. HSBC’s vehicle finance arm, which has produced a number of factsheets on the new tax, agrees the costs may increase by up to £30 a month.

The Inland Revenue was recently lambasted by accountants over the ‘major catastrophe’ predicted by the industry last year, which could see almost two million company car drivers paying the wrong tax on their vehicles.

The agency was forced to publicly apologise for the problems with its computer system, which resulted in it not having calculated coding notices.

Related reading