TaxPersonal TaxThe proposed company car tax system from 2002/2003 onwards

The proposed company car tax system from 2002/2003 onwards

The chancellor has confirmed his intent to move to an emissions based tax charge for company cars from April 2002 onwards.

Under the new system there will be no discounts for business mileage resulting in increasing the tax charge from 15% to 35% for high business mileage drivers. Although business drivers in particular, and particularly high business drivers, may be adversely affected by the changes, perk car drivers may even benefit.

As many company car drivers change their vehicles every four years, those car drivers should now be looking at CO2 emission rates on their proposed choice of vehicle to avoid any surprises in 2002. The percentage of the car?s list price to be taxed will escalate at least for the first three years of the new system.

For the person driving a car with a list price of approximately £19,000 and a CO2 emission rate of 202, a perk car driver will be better of by approximately 35% in 2002/2003, a high business mileage driver would be worse off by circa 35 % and the mid-range business driver would be in a similar position in 2002/2003 and worse off by 2004/2005.

The figures become more extreme when diesel cars are being considered as they carry an extra 3% levy.

Examples given on just one car looked at. Others could give more extreme examples.

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