Finance Bill Tracking Service 2010 | Budget 2010

BN43 TAXABLE BENEFIT CHARGES ON ZERO-EMISSION VEHICLES AND LOW EMISSION CARS

Who is likely to be affected?

1. Employees and directors provided with a company vehicle which is made available for private use, that is a car or van which cannot produce CO2 engine emissions under any circumstances when driven or a car which has an approved CO2 engine emission figure of 75g per kilometre or less.

General description of the measure

2. Individuals who, by reason of their employment, are provided with a company car or van which is made available for private use are subject to a taxable charge on the benefit. For cars, the benefit is normally dependent on the list price of the vehicle multiplied by the appropriate percentage. For vans, the benefit is set as a flat rate charge.

3. Legislation in Finance Bill 2010 will introduce a relief from the chargeable benefit where the car or van concerned cannot produce CO2 engine emissions under any circumstances when driven.

4. Finance Bill 2010 will also introduce a reduction to the chargeable benefit where a car has an approved CO2 engine emission figure of 75g per kilometre or less.

Operative date

5. The measure will have effect on and after 6 April 2010 until 5 April 2015.

Current law and proposed revisions

6. Section 139 of the Income Tax (Earnings & Pensions) Act 2003 (ITEPA) sets the appropriate percentage for cars with CO2 engine emissions, and section 140 of ITEPA sets the appropriate percentage for cars without CO2 engine emissions, including wholly electrically propelled cars. Section 139 will be amended to include a revised definition of a qualifying low emissions car. It will also introduce a reduced appropriate percentage of 5 per cent for company cars which produce ultra low CO2 emissions with an approved figure of 75g per kilometre or less. Section 140 will be amended to include a new appropriate percentage of 0 per cent for all cars which cannot produce CO2 engine emissions under any circumstances when driven and to remove the reference to wholly electrically propelled cars.

7. Section 155 of ITEPA sets out the cash equivalent of the chargeable benefit for vans. This will be amended to include a cash equivalent of £0 where the van cannot produce CO2 engine emissions under any circumstances when driven.

Further advice

8. If you have any questions about this change, please contact Su McLean-Tooke on 020 7147 2665 (email: pa.harris@hmrc.gsi.gov.uk). Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk