Employees
Company cars and fuel (Table C)
Changes previously announced will take effect on 6 April 2012. The taxable benefit of a car will still be based on a percentage of the original list price; this percentage is determined normally by the CO2 emissions rating of the car. The scale of percentages has been moved downwards, so that the 15% rate applies at a rating of 120g/km (instead of 125g/km). This means that the chargeable benefit will increase by 1% of list price for many cars. For a 40% taxpayer with a £15,000 company car, the extra tax arising from a 1% increase will be £60 for the year 2012/13. The employer will also pay an additional £20.70 in Class 1A NIC.
In 2011/12, cars with a rating up to 120g/km were charged at 10%, and up to 75g/km at 5%. In 2012/13, the 5% rate remains the same, but 10% only applies up to 99g/km; there are new 11%, 12%, 13% and 14% rates at 100, 105, 110 and 115g/km. Employees with cars in these categories may see a higher increase in their tax charge.
The taxable benefit of free fuel provided for use in a company car is calculated by multiplying the same percentage by a fixed figure.This will increase for 2012/13 to £20,200 (2011/12: £18,800), so for many employees the taxable amount for fuel will increase for two separate reasons. The figure has increased by 2% above inflation, and we are promised another similar increase next year.
| Tax Trap |
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| Be aware of the tax cost of your ‘free’ car and fuel |
Enterprise Management Incentive (EMI)
Certain trading companies with assets of up to £30m are permitted to grant share options worth up to £120,000 to selected employees within the ‘EMI’ scheme. Provided the conditions are satisfied, the profit made by the employee is charged to CGT rather than potentially to income tax and NIC. It is now proposed to increase the limit to £250,000.This requires EU ‘State Aid’ approval.