Budget 2006: Brown turns green? - Company motoring

A new 10% company car tax band will be introduced in the 2008/9 tax year for cars emitting less than 120g/km of carbon dioxide. Models that qualify for the 10% band include the smallest city cars, such as the Smart Fortwo or Citroen's C1.

The budget report does not say if diesels are included in this new tax band, but if they are, they may still be subject to the 3% surcharge for diesels and have tax payments based on 13% of their value instead of 10%. A raft of diesel superminis could, in theory, be eligible for this lower 13% rate.

Company motorists running other cars stand to see their tax bills increase slightly, as the carbon dioxide scale that is used to determine tax payments is made tougher.

From the 2008/9 tax year, the scale will start at 135g/km instead of today's 140g/km, so every make and model will move up one band.

Calls had been made for Mr Brown to increase mileage rates for workers using their own cars for business purposes, but there was no mention of this in the budget.

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