Budget 2006

The 2006 Budget and what it means to company car drivers.

Income tax - Company cars

The CO2 based system is to continue. Rates will remain the same for 2006/7 and 2007/8 and tighten in 2008/9 when the threshold for the minimum percentage is reduced from 140gco2pkm to 135g.

There will also be a new lower 10 per cent band from April 2008 for cars up to 120gco2.

Income tax - Fuel scale benefit charges

Following the Chancellor's announcements in 2002, the calculation is based on the same method as car tax, using the identical percentage derived from the CO2 emissions. This percentage is to be applied to an annual fuel list price equivalent of £14,400 for all cars and fuel types. See the fuel benefit calculator for a table and check to see if it is worthwhile. The Chancellor has announced that £14,400 will also be the figure to be used for the 2006/7 tax year.

Ved

New rates from 23rd March 2006 but these do not affect company car tax. There may be some OTR list price adjustments in late March/April as manufacturers protect their basic prices.

Mobile phones

The cost of telephone-specific options in cars was previously exempted from the company car tax calculation but could now be caught by a tightening in this area. We shall seek clarification on this.