Budget 2009

The 2009 Budget and what it means to company car drivers.

Here are some key extracts relating to company car drivers and fleets:

Income tax - Company cars

There will be some revisions from April 2011:

• Cars costing above £80,000 will no longer have their P11d values capped at this level. So after April 2011 Rolls Royce and Ferrari drivers will lose out on the massive tax efficiency that these cars currently allow. HMRC have clarified that this will also apply to cars bought before April 2011.
• CO₂ thresholds will tighten by 5g/km so many drivers will see tax bills for both the company car and fuel benefit rise by between 7 and 3%.
• Discounts for hybrid vehicles will be abolished, so that the tax scheme becomes technology neutral.
• Drivers of Euro IV standard diesels registered prior to 1st January 2006 (Type L) will lose the 3% discount currently enjoyed and be taxed on the same basis as other diesels. Comcar had understood previously that such cars would keep the discount for their whole life, so beware of this change if you are planning on clinging to a 6 year old car in 2011.

From April 2012 the tax scales are likely to be tightened even further and the 10%/13% band for cars emitting below 120g CO₂ will be removed. In its place the new system of CCT bands will start at 10% for some level of emissions below 120 (perhaps below 100g ?) and increase by 1% for every 5g CO₂ per km. The limit of 35% is likely to remain, but there was no mention of this in the Chancellor's statement. He removed the £80,000 cap so perhaps he will consider lifting the 35% maximum?

The Government is also thinking about removing the 3% diesel supplement for early adoption of the Euro 6 standard in diesel cars, but no definite plans were announced. (Back in April 2007 something similar was suggested for Euro 5 compliance before 2011 but nothing came of it.)

Income tax - Fuel scale benefit charges

Nothing was announced on this so we assume the multiplier remains at £16,900. However it could change at any time.The Chancellor does not provide the same level of advance notification in this area as he does for company car benefit. In the April 2008 Budget the Chancellor said that the this would increase in April 2009 in line with the rate of inflation so this level is consistent with zero inflation.

VED

No changes to previous announcements. New scales from A to M with a fiver increase for most cars commencing 1st May 2009.

Fuel duty

Escalator increases to continue. 2ppl in September 2009 and 1ppl above the inflation index each April for the next 4 years.
In September this means that duty will comprise 56.19 pence per litre of petrol or diesel (whilst the more environmentally damaging aviation fuel escapes with just 34.57p duty).

AMAPS

No changes.

Capital allowances

Confirmation of new April 2009 rules for cars costing £12,000 and above.

Scrappage scheme

The Chancellor has announced that a scrappage scheme will be put in place from 1st May 2009 and run for 11 months to March 2010. The scheme aims to boost sales of new cars and has not been billed as a "green" policy . Cars and vans over 10 years old ( taxed, MOTed, UK registered prior to 1st August 1999 and owned for at least a year) can be scrapped in return for a £2,000 discount on a new vehicle. The scheme relies on participating manufacturers to match £1,000 from the government. £300 million has been budgeted for this, equating to 300,000 new cars or approx 15% of the new market over 45 weeks.We haven't seen the final details and it is unlikely to be active until at least the middle of May 2009.