Company Car Tax: Company car tax explained

Company car tax

Fleet operators should now be used to CO2 emissions forming the basis of company car tax in the UK.

When benefit-in-kind tax was switched from mileage to CO2 emissions in 2002, it prompted a dramatic change in buying patterns for company car providers.

Company car tax bands

The tax bands have tightened, aligning themselves with lower CO2 emissions as time has passed.

While the bands have gradually become more punitive for drivers, vehicle efficiency has improved to such an extent that those who have chosen lower CO2-emitting cars, their tax bills might actually have reduced.

The tax bands tighten further in 2011, there are also other changes to prepare for both drivers and employers.

Hybrid vehicles will face higher taxation from April 2011 because the alternative fuel discount in company car tax will be eliminated.

The £80,000 P11D value ceiling will also be eliminated so expensive cars priced at higher than £80,000 will be taxed on their full value.

For more on co2 emissions tax, click on the link below.