Employment Issues
Company cars
Where a company car is provided for an employee’s private use, a taxable benefit
arises which is based on the list price of the car and its CO2 emissions. The percentages
range from 15% to 35% for most cars. There are currently discounts available for
environmentally friendly cars.
From 2011/12:
- the lower threshold CO2 emissions figure (130g/km for 2010/11) will be reduced
by 5g/km to 125g/km
- the £80,000 price cap that currently applies when calculating the cash equivalent
of the car benefit will be abolished
- the reductions currently for electronic/petrol hybrid cars and cars propelled
by bi-fuels, road fuel gas and bioethanol will be abolished. The discount given
for Euro IV standard diesel cars registered before 1 January 2006 will also be abolished
- electrically propelled cars will continue to be taxed at 9%.
Comment
The removal of the long standing £80,000 price cap will create a significant increase
in the car benefit for some!
The abolition of the reductions for electric/petrol hybrid cars and others will
change the focus of the legislation from the means by which the car achieves its
CO2 emissions figure to the CO2 emissions figure itself.
Living accommodation
Where an employee is provided with accommodation there is a tax charge on the benefit
to the employee of that accommodation. Where rent is paid by the person at whose
cost the accommodation is provided the charge is based on the actual rent paid (less
any amount made good by the employee), where that is more than the ‘annual value’.
Legislation will be introduced to stop attempts to avoid tax on the benefit of living
accommodation. The measure will apply in cases where accommodation is provided to
employees by reason of their employment through the payment of a lease premium.
The legislation will ensure that where a lease premium is paid for a lease of 10
years or less, the same tax treatment will follow as if the lease premium were actual
rent paid (spread over the period of the lease).
The legislation will apply to leases entered into or extended on or after Budget
Day.
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