Why driving a low emission company car is less taxing



As the current tax year starts to draw to a close,now is the time to review your current tax position .If you are a company car driver,you may be due to change your company car, and you want to reduce your tax liability in the coming tax year.

Sara Taylor,Director at Dufton Kellner,Chartered Accountants, says:

"If you drive a company car in the UK, the amount of tax you pay depends on two things- its list price when new, and its CO2 emissions.

"For the 2006/7 tax year, the lowest tax band is for cars producing 140g/km or less. You'll pay tax on 15% of the list price for such a car, so if you're a basic rate tax payer with a £10,000 car, your car tax bill will be just £330 per annum. The benefit rate increases at 1% for each 5g/km step up in emissions, up to a maximum of 35% for cars emitting 240g/km or more. So a higher rate tax payer driving an executive car with a list price of £35,000 will pay a whopping £4,900 in tax each year.

"From 2008/9, the level of CO2 emissions qualifying for the lowest 15% benefit rate will be reduced to 135g/km, and a new rate of 10% wil be available for cars emitting 120g/km or below."

You may simply want to drive a new car with lower CO2 emissions than your current model.But you can benefit both your pocket and the environment.

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