Vehicle Tax Info
From 17/12/2008
EU parliament passes new car CO2 legislation
Average CO2 emissions from new cars must be slashed to 130g/km by 2015, the equivalent of achieving 58mpg with a diesel engine and 52mpg in a petrol car.
The EU new car CO2 legislation passed by the European parliament today sets out a tough programme for car manufacturers with 65% of new cars averaging the 130g/km target by 2012, 75% by 2013, 80% by 2014 and 100% by 2015. An additional 10g/km must be achieved by complementary measures like alternative fuels and tyre pressure monitoring systems. Manufacturers exceeding the targets will be heavily fined per additional gram of CO2 emitted, for every car registered across Europe.
Small volume (below 10,000 units per year) will have tough individual targets set while niche manufacturers (10,000 to 300,000 units per year) are expected to deliver a 25% reduction of the 2007 figure. With the UK home to more than ten small volume and niche manufacturers, the provision serves to protect the diversity and dynamism of the sector.
Commenting, SMMT chief executive Paul Everitt said: “This is an ambitious piece of legislation presenting a tough challenge to the automotive industry. We share the environmental objectives and welcome the long-term framework the legislation sets out.
“The sector has already made significant progress in improving the environmental impact of its products and this legislation places an even greater premium on innovation, skills and training in order to meet these commitments. At a time of economic uncertainty, it underlines the importance of long-term investment in the sector.”
Q: Who has to pay?
A: Anyone driving a company provided vehicle outside work will have to pay vehicle benefit in kind tax. (BIK)
Q: Should I choose a car with a low list price?
A: The CO2 emissions decide the rate of tax - but you will still be taxed on the list price (PIID). Buying a cheaper car should achieve a lower tax bill.
Q: What about high mileage - I need my car for work?
A: There is no longer any recognition for 'essential' users, with reductions in tax bills, however there are no penalites for essential mileage users. The percentages apply whether you travel 1 mile or 30,000 miles per annum.
Q: Where do I find the CO2 emission figure for my vehicle?
A: Most manufacturers supply CO2 emission information on brochures and price lists. Since November 2000, the CO2 emission value has been included on all V5 documents issued with new cars. You can also obtain the information from the following:
* The Vehicle Certification Agency in Bristol
* http://www.vcacarfueldata.org.uk
* http://www.smmt.co.uk
Q: Who can benefit under the new scheme?
A: Generally speaking, car users who are willing to look for a car with a low CO2 emission figure and list price will benefit under the current system.
REMEMBER
DON'T JUST THINK ABOUT 2002 / 2004, SCALES WILL BECOME HARSHER IN FOLLOWING YEARS
AND FINALLY...
CO2 EFFICIENT VEHICLES WILL ALSO BENEFIT FROM LOWER VEHICLE EXCISE DUTY (ROAD FUND LICENCE) RATES.
Benefits of Leasing
Full use of vehicle without ownership. (The car is still classed as an asset and shown on the balance sheet, so improving the book or accounting value of the business)
A percentage of the VAT added to rentals can be reclaimed. (Reclaim 50%, which lowers the gross rentals cost)
Other 50% of VAT charge can be offset against your tax bill as per the %age of monthly rental
VAT on cost of the car is recovered by finance company. (Benefits of a lower capital cost to the finance company is passed on to the customer in the form of lower monthly rentals i.e. the rentals are calculated on the net of VAT price