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Company cars to be taxed more in 2015

09:57 23/12/2014

The new year will see tax on company cars rise by 2.5% to 3% more than in 2014. The tax increase is due to the annual CO2 emissions standard adjustment to taxable benefits calculations.

CO2 emissions are one of the key criteria that are taken into account when calculating taxable benefits. The CO2 emissions standard is reviewed each year. In January 2015, it will be lowered both for petrol and diesel cars. The taxable benefit will therefore increase and employees will see their net salary decrease due to the increase in the withholding tax on the benefit in kind.

For cars that are very environmentally friendly such as electric or hybrid cars, the lowering of the standard will have no impact and their owners will continue to pay the minimum tax as before.

Written by Deborah Forsyth