June Budget impact on company cars
R Russell
June 2010

The Emergency 2010 Budget on 22nd June 2010 and what it means to company car drivers.

The new Chancellor George Osborne today announced the following measures:

Income tax - Company cars

No changes from Labour's April Budget, so watch out for a massive increase on company car tax for 120gCO2 vehicles in April 2012.(For instance the overall impact for petrol cars is 50% as the CO2 percentage jumps from 10 to 15%)

Income tax - Fuel scale benefit charges

No changes. The fuel benefit multiplier is currently set at £18,000 for cars and £550 for vans. More drivers should consider rejecting this benefit, and the fuel benefit calculator is there to help calculate the breakeven point .

National Insurance Contributions

Both employee and employer NICs will increase by 1% from April 2011. Company car tax on 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 taxed by a further 1% when the NI rates increase.

VED

No changes.

VAT

The main rate of VAT will increase from 17.5% to 20% on 4th January 2011, increasing the cost of all new cars and fuel. This might boost car sales at the end of this year, but beware of anti-forestalling measures that will be announced to ensure that transactions are completed prior to 4.1.2010.

Fuel duty

No changes, so main road fuel duty will rise by 1p per litre on 1st October 2010 with a 0.76p rise on 1st January 2011, as well as 1p above indexation on 1st April 2011.

AMAPS

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