Company car tax goalposts shifting…

April 2012 will see yet another change in the company car tax banding system designed to favour even lower emission cars than before.

It’s a fact that average CO2 emissions have consistently fallen in recent year and now the figure now stands at 138g/km – according to some reports that’s 23% lower than in 2000. If you don’t feel that CO2 relate to you, just think – lower CO2 emissions mean reduced fuel consumption. Research firm Ricardo has reported that fuel consumption of the average new car has improved over the last 10 years from 40.6mpg to 52.5mpg.

All this gives the treasury what it seems to think is good reason to, once again, shift the goalposts for company car drivers. Until the end of the current tax year, business cars with CO2 emissions below 120g/km (Qualifying Low Emissions Cars) qualified for a special company car tax rate of 10% if they were petrol, or 13% if diesel.

This will end, and from the beginning of the 2012/13 financial tax year. From this April only cars with CO2 emissions 99g/km or less will qualify for the special rate. It’s going to get worse, though. For the 2013/14 tax year, the lowest qualifying rate is due to be reduced to 95g/km CO2.

For more information click here for an interesting article from an expert in the field.