Budget 2003
 

Nothing unexpected has changed on the company car taxation front both for the company car driver and the fleet operator. Many of the changes, for example the new regime for the private fuel benefit, were detailed in advance. The main announcement, which was new, was the charge for the company car benefit regime for the tax year 2005/6, expected to raise £125m. The amendments that were announced in this Budget and detailed below were billed as required measures to protect the environment, a clue as to the Chancellor’s agenda.

Company car tax charge 2005/06

During the tax year 2005/06, company car drivers will be paying income tax on an extra taxable benefit of 1% of the list price compared to what they will be paying in tax year 2004/05. Please see the table below for the details:

Level of CO2 Emissions (g/km) % of List Price
2003/2004 2004/2005 2005/2006
155 145 140 15*
160 150 145 16*
165 155 150 17*
170 160 155 18*
175 165 160 19*
180 170 165 20*
185 175 170 21*
190 180 175 22*
195 185 180 23*
200 190 185 24*
205 195 190 25*
210 200 195 26*
215 205 200 27*
220 210 205 28*
225 215 210 29*
230 220 215 30*
235 225 220 31*
240 230 225 32*
245 235 230 33**
250 240 235 34***
255 245 240 35****
 
Diesel Supplements
 
* add 3 per cent if car runs solely on diesel
** add 2 per cent if car runs solely on diesel
*** add 1 per cent if car runs solely on diesel
**** maximum charge so no diesel supplement
 
It is assumed that the Scale Charge Rates for 2006/2007 are the same as for 2005/2006.
 

The diesel supplement will only be waived if the car achieves Euro 4 emission standard.

Free Benefit in Kind Calculator » www.cartax.co.uk/cartaxcalcs
Follow the link above to use the free calculator on our Web Site to see what your benefit in kind charge is for 2003/04, 2004/05 and 2005/06.

Cash or Car Decision » www.cartax.co.uk/driverchoice
Follow the link above to use a calculator on our Web Site that can help you decide whether this change affects your decision to take a company car or a cash alternative.

Cash or Car Decision (Multiple Calculations) » www.cartax.co.uk/desktop/products/dc/
Follow the link above to download our free demo desktop software for multiple calculations of the Cash or Car Decision.

Vehicle excise duty from 1 May 2003

This tax year VED rates have been increased by £5 for cars and vans on the previous tax year. The Chancellor has also introduced a new rate of VED this tax year to encourage the use of cleaner cars.

For environmentally friendly cars registered on and after 1 March 2001 with CO2 emissions of less than 100g/km you can pay as little as £55 per year whereas for the cars with the highest CO2 you can pay up to £165.

Registered on and after 1 March 2001:

VED band CO2 emission level (g/km) Clean fuel
£		 Petrol
£		 Diesel
£
AAA Up to and including 100 55 65 75
AA 101 - 120 65 75 85
A 121 – 150 95 105 115
B 151 – 165 115 125 135
C 166 – 185 135 145 155
D 186+ 155 160 165

Registered before 1 March 2001:

Engine Size £
1549cc and below 110
Above 1549cc 165

Company vans

In Budget 2002 it was announced that the Government would review the tax treatment of the private use of vans provided by employers, taking into account environmental benefits, fairness and modern working practices. The Government plans to consult formally on the tax treatment of company vans shortly after the 2003 Budget.

VAT fuel scale charge

VAT scale charges have been increased to reflect an increase in fuel prices. The new scales for output tax should be used from the start of a company’s first accounting period beginning on or after 1 May 2003. They are as follows:

  Diesel
  12 month period 3 month period 1 month period
Engine Size cc Diesel
£		 VAT due per car
£		 Diesel
£		 VAT due per car
£		 Diesel
£		 VAT due per car
£
0 – 1,400 900 134.04 225 33.51 75 11.17
1,401 – 2,000 900 134.04 225 33.51 75 11.17
2,001 + 1,135 169.04 283 42.14 94 14.00
  Other Fuel
  12 month period 3 month period 1 month period
Engine Size cc Other Fuel
£		 VAT due per car
£		 Other Fuel
£		 VAT due per car
£		 Other Fuel
£		 VAT due per car
£
0 – 1,400 950 141.48 237 35.29 79 11.76
1,401 – 2,000 1,200 178.72 300 44.68 100 14.89
2,001 + 1,770 263.61 442 65.82 147 21.89

New regime for private fuel benefit

Although this was announced before this Budget the new system came into being on 6 April 2003. It is based on CO2 emissions and uses the same percentage graduations, including discounts and premiums, as used in the company car tax system (see above). The percentages are applied to £14,400 for 2003/04. Most employees are unlikely to be better off taking free fuel.

Cash or Fuel Decision » www.cartax.co.uk/coFuelAdviser
Follow the link above to use a calculator on our Web Site that can help you decide whether to offer your employees free fuel.

Catherine Bowden
Manager
Deloitte & Touche LLP

     
 
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