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Tax Issues - Reform of Company Car Tax

Until 5 April 2002 | From 6 April 2002

March 2000 Budget

In this March 2000 budget, the Chancellor announced details of a major reform of company car tax. From april 2002, cleaner, more fuel efficient cars will be rewarded by linking the tax charge to the car's exhaust emissions. this leaflet explains how your car benefit is calculated now, and how it is proposed to calculate it from April 2002.

Existing rules applying until 5 April 2002

The exitising tax charge on a company car is based on the following percentages of the price of the car for tax purposes:

  • 35% for annual business mileage less than 2,500 miles
  • 25% for annual business mileage of 2,500 to 17,999 miles
  • 25% for annual business mileage of 2,500 to 17,999 miles

Older car discounts
For a car 4 or more years old at the end of the tax year, the car benefit charge for the appropriate mileage band is further reduced by one quarter.

Second cars
The tax charge on second cars is generally on 35% of the price of the car. Where, exceptionally, the second car is also used for at least 18,000 business miles in the year, the charge is 25% of the price of the car.

Price of a car for tax purposes
The price of a car for tax purposes is the same under both the old and new schemes. Your employer should normally be able to tell you what this is. For more detailed information about the price of a car for tax purposes ask your Inland Revenue office for leaflet IR172, Income tax and company cars: A short guide to the taxation of company cars

 
     
 
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Tel: 01491 615 500
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OVL Group Ltd
Registered in England no. 05505558
Registered Address: 88 Sheep Street, Bicester, Oxon, OX26 6LP

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