Company car drivers are being reminded that on 06 April, the start of the 2018/19 tax year, benefit-in-kind (BIK) tax rates will increase across the board.
For cars with carbon dioxide (CO2) emissions above 75g/km – which is most vehicles – there will be a 2% increase in BIK tax. This means, for example, that an employee driving a 120g/km petrol engined model will see their tax bill increase from 23% of the P11D value in 2017/18 to 25% in 2018/19.
At the low-emissions end of the scale, rates for cars with emissions of 0-50g/km increase by 4% and those with emissions of 51-75g/km by 3%.
Diesel supplement also increasing
What’s more, the current company car BIK tax supplement for diesel vehicles will increase from 3% to 4% at the same. As a result, employees driving diesel cars will experience a three percentage point tax hike starting next month.
The supplement increase is estimated by the Government to impact on 800,000 employees and is being applied to all diesel cars that are not certified to the Real Driving Emissions 2 standard. As of right now, there are no certified models available.
When HM Treasury announced the supplement increase in last November’s Budget it forecast that drivers of a BMW 3 Series (CO2 emissions 111-130g/km) would see tax bills rise in 2018/19 by £60 (basic rate taxpayer) and £120 (higher rate taxpayer), drivers of a BMW 6 Series (CO2 emissions 131-150g/km) by £125/250 and drivers of a Ford Focus (CO2 emissions 91-100g/km) by £43/£86.