Page 18 - Budget Newsletter - March 2023

EMPLOYEES

Company cars

The percentage scale charges for company cars in 2023/24 (and 2024/25) will be unchanged from
2022/23. The Autumn Statement announced that:

• The scale percentages for electric and ultra-low emission cars (less than 75g/km CO2) will
increase by 1 percentage point in each year from 2025/26 to 2027/28, subject to a
maximum scale percentage of 5% for electric cars and 21% for ultra-low emission cars.

• Rates for all other vehicles bands will be increased by 1 percentage point for 2025/26 up to
a maximum appropriate percentage of 37% and will then be fixed for 2026/27 and 2027/28.

The Autumn Statement also confirmed that the car fuel benefit base figure would rise by 10.1% to
£27,800 in 2023/24. The latest HMRC data showed that, in 2020/21, only 60,000 drivers received this
benefit, a reflection on the fact that it requires a very substantial private mileage to make financial
sense.

Planning Point

If you are changing your car soon, think ahead to what it will cost you in tax terms. It may make
sense to accept cash instead of a new car, switch to a hybrid vehicle or join the growing band of
Tesla drivers.

Pensions

The pensions landscape has altered dramatically in recent years and the Budget produced three
radical changes of its own, one of which was completely unexpected:

• Before the Budget, the LTA, which sets a tax efficient maximum value of pension benefits,
was widely predicted to increase to £1.8m, the level it first reached in 2010/11. Instead, in
what probably comes closest to being the rabbit out of Mr Hunt’s hat, the LTA will effectively
be abolished from 6 April 2023. The mechanism used to achieve this is (fittingly) complex,
but it means that, from 2023/24, LTA charges and the various transitional protections will
fall away. However, the Labour Party has already announced it will reverse this move,
should it win the next election.

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