The government confirmed a new low-emission tax band for 2008/09.
The new 10% tax band will be for cars with emissions up to 120g/km.
Hybrids and bi-fuel cars would receive no further discount.
Diesel cars with emissions below 120g/km would still receive a 3% surcharge – ie tax band 13%.
Fully electric cars would retain their special 9% tax rating.
The Pre-Budget Report also confirmed that the threshold rate for the 15% tax rate would also be lowered – from 140g/km to 135g/km.
Car tax savings on a 10% qualifying car
- Car Honda Civic Hybrid ES
- Emissions 109g/km
- Economy 61.4mpg
- Tax band 07/08 12%
- Tax band 08/09 10%
- Tax saving £72 (22%) / £130 (40%)
Source: HSBC DriverQuote
In addition, Budget 2007 would set out the company car tax thresholds for 2009/10.
Chancellor Brown said the government would also consider incentivising the take up of flex-fuel vehicles that can run on high blend bioethanol – such as the Ford Focus Flexi-Fuel and Saab 9-5 BioPower. Such cars are said to be CO2 neutral.
Driver tax savings from 2008/09 tax year
