Company car benefits are calculated based on the list price of the car multiplied by an appropriate percentage according to the level of the car’s CO2 emissions up to a maximum of 37%. For diesel cars the appropriate percentage is increased by 3% subject to the overall maximum. This supplement was due to be abolished in 2016-17.
It has been announced that the diesel supplement will now be retained until 2021, when EU-wide testing procedures will ensure new diesel cars meet air quality standards even under strict real world driving conditions.
Company car policies may need to be reviewed after this unwelcome announcement affecting both employers and employees with diesel company cars.