Background Note
8.Section 139 ITEPA 2003 sets out the basis for calculating the appropriate percentage for cars with CO2 emissions. The appropriate percentage multiplied by the list price of the car (adjusted for any taxable accessories) provides the level of chargeable benefit for company car tax for employees and of Class 1A NICs for employers.
9.From 6 April 2018, the graduated table of bands for taxing the benefit of a company car will provide for a two percentage point increase for cars emitting more than 75 grammes of CO2 per kilometre to a maximum of 37% for cars emitting 200 grammes of CO2 per kilometre or more. There will be a 3 percentage point differential between the 0-50 and the 51-75 grammes of CO2 per kilometre bands; and between the 51-75 and 76-94 grammes of CO2 per kilometre bands.
10.This will continue to support the wider market for ultra low emission vehicles (ULEVs) by maintaining lower taxation for ULEVs. At the same time, the increase in appropriate percentages ensures the tax system continues to support the sustainability of the public finances.
11.The government is committed to legislating over two years in advance of the implementation date so that employers and employees can make informed choices about the type of vehicle and future tax implications.
12.Section 140 ITEPA 2003 sets out the basis for calculating the appropriate percentage for cars without a CO2 emissions figure and all but the highest band have been increased.
13.Section 142 ITEPA 2003 sets out the basis for calculating the appropriate percentage for cars registered before 1 January 1998 and these have also been increased in line with the other changes.
