Will the VW emissions scandal hit my tax bill?

Volkswagen have been hitting the headlines recently - though this time for all the wrong reasons. It seems that they ‘totally screwed up’ (their words not ours) and have been caught red handed rigging the emissions tests on their diesel cars in the US.

The ramifications for businesses could be far reaching, so read on to discover why....

Although VW shareholders are less than delighted by this scandal (the share price dropped overnight), ironically HMRC are far from upset by these recent developments. They're no doubt rubbing their hands with glee at the prospect of an unexpected windfall.

What's this windfall are you talking about?

Well any change in a car's CO2 emissions will impact on anyone using a car in business.

So for example if your business is claiming capital allowances on a vehicle the allowance drops by 10% for a vehicle with emissions over 130g/km.

The situation isn't great if you're a company car driver either. Because your taxable benefit is determined by emission levels. A mere 2% increase in an emission level could increase your annual tax bill by approximately £800!

VW have admitted that models sold outside of the US are also affected and we've just heard that nearly 1.2 million cars in the UK have the same issue. Who knows whether any other manufacturers have pulled the same stunt as VW and what emissions are being affected/tampered with. This is just the sort of opportunity that HMRC have been dreaming of!

Maybe now's the time to start thinking about buying an electric car? or alternatively you could contact our friendly tax adviser richard@thefriendlyaccountants.co.uk for some sensible company car tax planning advice. Better still why not give us a call on 01202 048696.








"Compared to petrol, diesel vehicles have significantly lower CO2 emissions per kilometre travelled because of the higher efficiency of diesel engines", says the UK's Department of Transport. Not, it seems if you are driving a VW. Your car's published emissions may be substantially lower than the genuine output.



VW today admitted that models sold outside of the US are also affected. It also remains to be seen whether any other manufacturers have tried VW's ruse and what emissions are being affected. The majority of modern cars are heavily dependent on software for their engine management.



Any change in a car's CO2 emissions will impact on anyone using a car in business:



If you are claiming Capital Allowances on a vehicle: the allowance claimed drops by 10% for vehicle with emissions over 130g/km.


The situation may not be ideal for company car drivers too. The taxable benefit of their car and its fuel is also determined by its emissions levels. A 2% increase in an emission level could increase your annual tax charge by around £800 per year

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