Taxation Essay Example | Topics and Well Written Essays - 1250 words

Taxation - Essay ExampleBack in 2002, the politics introduced new reforms on telephoner cars. The union car tax reform encourages people to get of choose cars with lower levels of carbon dioxide (CO2) emissions. Purposely, the reforms are aimed at tackling changes in climate and greenhouse gas emissions. Also, it overly encourages manufacturers to introduce greener cars. As a result, businesses should evaluate their current fleet arrangements and especially those that emit carbon in order to minimize costs. The Government also aims at increasing its revenue (Melville 2012). It has already estimated additional additive tax revenue of c?3bn over five years if changes come to effect. The changes willing affect iii categories of people. To begin with, employers purchasing or leasing cars that are made available to their staffs for business and personal use. Then, employees provided for with a company car and fuel for underground use. Changes on cars with private fuel attains t ook effect as from April 2012 while changes on capital allowance and lease rental restriction consequences will take effect from April 2013 a. Changes on company car tax rates In the motoring industry, the government has announced for a further tercet tax years up to 2016/17. In years 2014/15, the appropriate percentage of a company cars expense which is subject to tax will go up by 1% point compared to the previous years for those cars which emit more than 75g/km of CO2, to a maximum of 35% and by two percentage points, to a maximum of 37 per cent in both years 2015/16 and years 2016/17 (Melville 2012). In year 2015/2016, the special rates that exist for zero emission and ultra low carbon cars will be changed to 13% while in years 2016/17, the rate will be set to 15%. As from April 2016, supplement for diesel cars which is 3% will be removed. For company cars made available for private use, the government announced that specific security enhancements will be excluded as accessori es for the purpose of calculating cash equivalent benefit. This change is already being applied as it took effect from 6 April 2011. b. Changes on one-on-one fuel benefit As from April 2012, the multiplier for calculating the cash equivalent free fuel benefit on company cars provided to employees has been increased from ?18,800 to ?20,200. In addition, a further increase to this multiplier has been proposed by the government for 2013-14 by 2% above the rate of inflation. c. Changes on Capital allowances and lease rental restriction gibe to HMRC, first year capital allowance on the car expenditure which is usually 100% has its tip extended by the government to April 2015. On the other hand, the threshold on emissions will decrease from 110g/km to 95g/km starting April 2013. Also, as from April 2013, the threshold for expenditure on cars to fall into the main pool which is 18% per annum, rather than the special rate pool of 8% per annum decreases from 160g/km to 130g/km. On lease r entals for cars with over 130g/km emissions, tax relief available to employers is restricted at 15%. On lease rentals for cars with over 130g/km emissions, tax relief available to employers is restricted at 15% (Melville 2012). d. Changes on Vehicle Excise debt instrument (VED) As from April 201