Alistair Darling delivered this years Pre-Budget Report at 12.30pm on 9th December. Here are some key extracts relating to company car drivers. Here are some key extracts relating to company car drivers.

Income tax - Company cars

Company car tax will continue to tighten so that from April 2012 petrol cars will need to have sub 100g CO2/km to be taxed at 10%, rising 1% for every 5g more. There is no longer a discount for hybrids, and diesels will continue to be taxed at an additional 3%. So far there is no sign of any discount for early achievement of the Euro 6 emission standard. Meanwhile the government is looking to electrification as a way of reducing carbon from road transport, so electric cars will be exempt from company car tax for 5 years commencing April 2010.

Income tax - Fuel scale benefit charges

The fuel benefit multiplier which is currently set at £16,900 will rise to £18,000 from April 2010. Van drivers will see a £50 increase to £550 at the same time. The chancellor acknowledged that the provision of free fuel acts as a "perverse environmental incentive" but it is ironic that by setting a higher threshold, it is now even more of an incentive for drivers to pile on the miles to make sure they get value for money from a fixed amount of tax. Of course more drivers should consider rejecting this benefit, and the fuel benefit calculator is there to help calculate the breakeven point for this year and next.

National Insurance Contributions

Both employee and employer NICs will increase by 1% from April 2011. Company car drivers won't be affected, but their employers will then have to pay Class 1 NICs of 13.8% of the benefit value. Those who take an allowance instead of a company car will also have their allowance reduced by a further 1% when the NI rates increase.


No changes to the increases previously announced.

Fuel duty

Following previous announcements, main road fuel duty will rise by 1p per litre in real terms on 1 April each year from 2010 to 2013.


No change. This difficult area is left alone at 40p for the first 10,000 miles and 25p thereafter.

Capital allowances

The introduction of 100 per cent first-year allowance for electric vans from April 2010 was announced, (though confirmation that this does not offend EC State Aid rules will need to be obtained by the Government). Electric cars are already eligible.