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Income Tax (Earnings and Pensions) Act 2003

Section 139: Car with a CO2 emissions figure: the appropriate percentage

521.This section identifies the “appropriate percentage” to be used at Step 6 in section 121(1) of this Act to calculate the cash equivalent for a car that has a CO2 emissions figure. The section derives from paragraphs 3(3), (4) and (5), and 4(1) and (3) of Schedule 6 to ICTA.

522.Subsection (1) states the starting point for arriving at the appropriate percentage, which is the car’s CO2 emissions figure.

523.Subsection (2) gives the appropriate percentage if the car’s CO2 emissions figure is no higher than “the lower threshold”. This is the “basic percentage”, initially set at 15%.

524.Subsection (3) gives the appropriate percentage if the car’s CO2 emissions figure is higher than “the lower threshold”. The basic percentage is increased by one percentage point for each additional (full) five grams per kilometre of CO2 emitted, up to a maximum appropriate percentage of 35%. The reference in paragraph 3(4) to “the basic percentage increased by 1%” is rewritten as “the basic percentage increased by one percentage point”. That makes the intention of the legislation clearer, as it avoids any suggestion that the “minimum percentage” must be increased by 1% of itself (to 15.15%).

525.Subsection (4) states what is “the lower threshold” for different tax years.

526.Subsection (5) provides for the rounding down of the car’s CO2 emissions figure to the nearest multiple of five. Its effect is that the basic percentage is increased under subsection (3)(a) by one percentage point only for every additional full five grams per kilometre of CO2 emitted.

527.Subsection (6) makes the section subject to other provisions relating to diesel cars and to Treasury powers to amend the amounts involved.

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