Introduction Summary
1.Income tax on the chargeable benefit for a company car made available for private use is calculated on the list price of the car multiplied by the appropriate percentage (normally based on the CO2 engine emissions of the vehicle). Income tax on the chargeable benefit for a company van made available for private use is based on an annual flat-rate charge – the “cash equivalent”. Section 58 makes the necessary amendments to the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) required to allow company cars and vans which cannot produce CO2 emissions under any circumstances when driven to qualify for an appropriate percentage of 0 per cent in the case of a car and for a cash equivalent of nil in the case of a van. It also introduces a reduced appropriate percentage of 5 per cent in the case of a car with approved CO2 engine emissions of exactly 75 grams per kilometre or less.
2.The special percentage of 0 per cent for cars will apply for the tax years 2010-11 to 2014-15, and will revert to the 9 per cent currently applicable to electric cars for the tax year 2015-16 onwards. The nil cash equivalent for vans will apply for the tax years 2010-11 to 2014-15, following which it will revert to £3,000.
3.The reduced percentage of 5 per cent for ultra low emission cars will apply for the tax years 2010-11 to 2014-15, and will revert to 10 per cent for the tax year 2015-16 onwards.