Lambert Chapman LLP's Richard Thomson asks "Want to pay less tax? Look at tax efficient cars"

The government has provided beneficial tax treatment for cars with low emissions. In the past when assisting clients in trying to take advantage of the provisions, one of the main problems has been the lack of ‘quality’ cars. The level of low emissions the vehicle required to take advantage of the tax incentives left only the smallest, most underpowered cars available.

Having recently been provided with a low emissions car as a courtesy car by my local garage, I was pleasantly surprised at the quality of the vehicle, its performance and the costs involved. In this case I was given a 1.4L VW Polo Bluemotion.   The car had power, could easily cruise at 70 and (per VW) gets over 70 MPG.  

After driving the car for the day, I can only sing its praises and when my car comes for renewal will certainly consider purchasing one of this generation of fuel efficient cars, albeit perhaps a slightly bigger model than the Polo. I assume the other car manufactures are keeping up with developments and producing their own equivalent vehicles.

The Polo Bluemotion has the following statistics:

CO2 - 99gm/km, 74MPG (combined)

The VW range of low emission cars also include:

Golf 1.6TDI Bluemotion– 107gm/km, 68MPG (combined)

Passat 1.6l TDI Bluemotion – 114gm/km, 62MPG combined

(The specific statistics may vary and can be checked on the manufactures web site).

The Taxation of Low Emission Cars

Our website article of 24 August entitled "Company Cars Time for a change?" provides some further information on the taxation of cars.

Generally, the taxation of cars is now based on the vehicle’s CO2 emissions.

To summarise:

Less than 110gm/km of CO2:

A 100 percent First Year Allowance is available (the business is able to obtain tax relief on the full purchase cost of the car in the period of acquisition).

CO2 up to 120gm/km

Company car benefit of 10%/diesel 13%

Car Tax should also be considered as follows:

Up to CO2 of 100gm/km - £ Zero,

CO2 between 100gm/km and 120gm/km - £35

There can therefore be significant tax savings of purchasing a car for the business with low emissions. The fuel efficiency of the vehicles may also provide their own savings. Further lists of low emission cars are available on the internet, including at greencarsite.co.uk.

If you need further clarification about how cars are taxed please contact Richard on 01376 326266 or your local Lambert Chapman contact.

Date:26 October 2009

  Mail this article to a friend