EMPLOYMENT TAXATION

Company Car Benefit

A new lower rate is to be introduced on the tax benefit of a company car made available for an employee’s private use, from 6 April 2008. The taxable benefit is calculated on a percentage of the car’s list price (the percentage being related to the CO₂ emissions of the car).

The lower rate of 10% (13% for most diesels) will apply to cars with CO₂ emissions of 120g/km or less.

The 15% lower threshold will be 135g/km for 2008/09 and 2009/10 and 130g/km from 2010/11.

Van Fuel Benefit

The rules for reimbursement of fuel purchased for business travel in company vans are to be aligned with those for company car fuel, with effect from Royal Assent to Finance Act 2008. The amount reimbursed will not be treated as earnings for tax purposes.

Residence and Domicile: Changes for Employment-related Securities

Legislation is to be introduced to ensure that the income tax charge in respect of employment-related securities operates in broadly the same way for employees who are UK resident but not ordinarily resident as it does for employees who are both resident and ordinarily resident in the UK. Where an employee is taxable on the remittance basis by virtue of his being not ordinarily resident, the amount otherwise chargeable in respect of employment-related securities will be apportioned, and any proportion relating to overseas duties will be charged on the remittance basis. A similar apportionment will be available to individuals not domiciled in the UK where the amount otherwise chargeable relates to a foreign employment the duties of which are performed wholly outside the UK. The legislation will have effect for 2008/09 onwards but not so as to affect securities acquired or options granted before 6 April 2008.