Cars that emit less than 165g/km of CO2 will incur a tax charge of 15% of their list price, rising by 1% per 5g/km, to a maximum of 35% . The new system will tighten in future years to maintain the pressure on fleets to select 'green' cars. So in the 2003/04 tax year (the British tax year runs from April to April) only cars that emit less than 155g/km will qualify for the minimum 15% company car tax charge, and in 2004/05 this lowest limit will fall to 145g/km.
This new system would appear to favour diesel-powered cars (about 25% of the UK fleet parc) because they emit much lower levels of CO2 than their petrol equivalents. But the Government plans to impose a 3% levy on diesels because of their emissions of PM10 particulates up to a maximum of 35% of list price. This means a diesel car that emits less than 165g/km of CO2 would incur a tax charge of 18% of its list price (the 15% minimum charge plus the 3% diesel penalty).
The Government has, however, said that it may revise the 3% diesel penalty for 'clean' diesels, such as the new Peugeot 607 that features a particulate trap. Peugeot, Volkswagen, Ford and Vauxhall, backed by fleet organisations, have already started a campaign to 'stop this diesel outrage'.