Talking to your clients – Employer provided car changes

Tax is an ever changing world but some changes are more important to clients than others.

Whilst you will be aware of the technical issues it is easy to forget, and find the time, to focus on explaining these to clients. Taking extracts from our Finance Act 2012 course notes, we have prepared a series of tax tips to assist you when 'Talking to your clients' to provide proactive, responsible and timely advice therefore saving you time.

Employer-provided car changes from April 2013

Legislation has been introduced to reduce the 100gm/km limit to 95gm/km for 2013/14. Zero emission cars will remain at 0% and ultra-low emissions cars with emissions up to 75gm/km will remain at 5%.

Employer-provided car changes from April 2014 onwards

Legislation is introduced to increase the appropriate percentage of the list price subject to tax for cars with CO2 emissions of more than 75gm/km by 1% up to a maximum of 35% in 2014/15 i.e. those cars up from 76-94gm/km will be 11%, 95gm/km 12%, etc.

Further changes are proposed in 2015/16 and 2016/17 whereby the appropriate percentages of the list price subject to tax will increase by 2% per annum up to a maximum of 37% in both years.

From April 2015 the five year exemption for zero emission cars and the lower rate of 5% for ultra-low emission (1-75gm/km) cars will come to an end.

The percentage for zero emission and all low emission petrol cars emitting less than 95gm/km of CO2 will be 13% in 2015/16, rising to 15% in 2016/17.

The percentage for low emission (95gm/km) diesel cars in 2015/16 will be 16% as it will include the 3% diesel supplement.

From April 2016 the Government will remove the 3% diesel supplement so that diesel cars will be subject to the same level of tax as petrol cars.

'On average this measure will give year on year increases in the tax paid by an employee driving a petrol company car of £70 in 2014-15, £165 in 2015-16 and £165 in 2016-17. An employee driving a diesel company car will see average increases of £85 in 2014-15 and £190 in 2015-16, followed by a reduction of £85 in 2016-17.'

Key point

Make sure clients are aware of the key changes ahead.