I have read and heard recently about the fact there are to be some changes next year on company car tax for diesels but cannot seem to get a clear idea of what is to happen and how it will affect me. Can someone help please?
I drive a 2005 Volvo S60 D5 S which is a Turbo Diesel, 2.4 litres with a CO2 of 166g. With the Diesel surcharge on company car tax of 3% because it's not Euro IV this makes it taxable at 23% of it's list price for the 2005/06 Tax year.
I have heard that the 3% levy will be scrapped for 2006 but is this on just Euro IV cars or would it apply to me as well? Any advice appreciated.
Also I pay tax on the 'list' price of the car. Is this the Recommended Retail Price of the car when new or the 'On The Road' price when new?
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have a look at the Inland Revenue for the full details:
www.hmrc.gov.uk/budget2005/revbn30.pdf
The relevant data is that the waiver of the 3% supplement is being removed for cars registered after 1st January 2006. So everybody driving a diesel will pay the 3% surcharge.
I can't find the reference but I think by then all diesels will have to be Euro IV compliant anyway.
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SFR
The PIId value of your car should be given to you by your company. It is the Manufactuers List Price (not OTR) including any extras.
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At the moment, if you have a Euro IV complaint diesel (like my Mondeo) then you don't say the extra 3% benefit in kind (BIK) charge on the list price of the car. For non-Euro III diesels, like yours, you do pay the 3%.
In 2006, the chancellor is changing the rules back to how they used to be before, so ALL DIESELS REGISTERED AFTER JANUARY 2006 pay the 3%. This is because all diesels have to be EuroIV by then and so he's removing the incentive to opt for a Euro IV engine.
For cars registered before the end of this year, the current rules continue to apply, i.e. the 3% reduction applies to Euro IV cars.
Yours being Euro III, then you'll see no change next year. Should have gone for a Euro IV one and saved some money.
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Ha! So effectively anyone running a EuroIV OR Euro III from 2006 will have the 3% extra charge, unless they bought / buy Euro IV before Jan 2006?
You are right, I should have got Euro IV, but this was not an option with the S60 and having had a Mondeo before I fancied the change to the Volvo with the amazing D5 163hp engine. For that (and the supremely comfortable seats) I am happy to pay the extra.
Now I see that the S60 has the option of a 185hp D5 engine in Germany and that will probably come here soon. Damn, should have waited....................
Cheers!
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After 2006, you won't be able to get a Euro III diesel so they'll all be Euro IV. And that's why the chancellor's being a bit mean and taking away the 3% waiver.
Now correct me if I'm wrong but aren't these EuroIV diesels better for the environment (smaller/less particles and lower NOx emissions bit sometimes slightly higher CO2) and the 3% charge on diesels is because they're "dirty".
Rob
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Should have gone for a Euro IV one and saved some money.
It's very marginal though. Where the option to choose exists (ie Mondeo TDCi) the EUIV version is more expensive. Even where there's no choice, most manufacturers increased their pricing when they went to EUIV. They're also usually slightly less economical, so will increase fuel cost (only an issue of you're paying for it yourself, of course).
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Bill sums it up nicely however after the end of this year the choice will not exist. Clearly there will be a rush to register company EIV diesels before the end of Dec so as to save the 3%, afterall if the driver waits to Jan they would have to have an EIV diesel anyway and will pay more for it.
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Of course there might be a rush to register EIII diesels as well if the manufacturers have excess stock, i.e. deals to be had by the private buyer.
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I suspect that there will indeed be good deals to be had on the Euro III diesels as manufacturers clear stock. I think to get the best deal it would be advisable to check with whoever is selling them. Awareness of little things like this can save £££££££'s (well, maybe not 7 figures.......).
Of course it could be argued that if you have EURO IV you would be kinder to the environment but if they are going to e sold to someone else 'cause they have already been built why not.
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