From 6 April 2003 the tax rules on company cars change yet again! Here are six points you should consider:

1. New basis of fuel scale chargeFrom 6 April 2003 the fuel scale charge benefit in kind will be calculated by taking the percentage used to calculate the car benefit (dependent on CO2 emissions) and multiplying it by £14,400. This might significantly increase the taxable benefit for employees.

   In some cases an employee might pay £2,016 tax on this benefit and would need to cover more than 17,000 private miles not to be out of pocket! At the same time the company would suffer the fuel cost and Class 1A NIC. Scrapping the benefit might result in a windfall that can be kept or shared with the employee.

1. Part-year chargeUp until 5 April 2003 the rules for the fuel scale charge make it an “all or nothing” tax i.e. any private fuel paid for by the employer will make the full year’s scale charge apply. From 6 April 2003 the new rules will allow you to drop private fuel during the year and only be taxed for the relevant part of the year, but beware that you cannot swap back within the same year without the full year’s benefit being chargeable.

1. Alternative fuel vehiclesRemember that duel fuel or alternative fuel vehicles will attract a very low benefit in kind and might even gain you 100% first year tax allowances in your business.
   • Battery driven vehicles will attract a charge of only 9%.
   • Gas (only) driven vehicles will attract a reduction to the car scale charge of 1% plus an additional 1% for every 20 g/km of CO2 the emissions fall below the minimum qualifying level.
   • Petrol/Electric vehicles will attract a reduction to the car scale charge of 2% plus an additional 1% for every 20 g/km of CO2 the emissions fall below the minimum qualifying level.
   • Petrol/LPG bi-fuel cars will attract discounts depending on whether the vehicle is an approved type. Approved CO2 figures will exist for new cars built after 1 January 2000 with bi-fuel capabilities. These cars will then attract a reduction to the car scale charge of 1% plus an additional 1% for every 20 g/km of CO2 the emissions fall below the minimum qualifying level. For cars registered before 1 January 2000, or subject to conversions after manufacture, the premium for conversion will be ignored and the scale charge will be based on the petrol only car scale charge with a reduction to the charge of 1%.
   • Cars with less that 120 g/km CO2 emissions bought new after 17 April 2002 will qualify for 100% Capital Allowances.
2. Conversion grants
   Conversion grants for bi-fuel vehicles are available. See http://www.powershift.org.uk for details. Beware that grants are only available in advance of incurring the expenditure and must be for approved vehicles.