Company cars, childcare and capital gains tax

Featured on – The Business Desk

Although the Autumn Statement was unusually quiet on tax changes, providing some respite from the more significant changes that have been introduced previously by George Osborne, there were still some tightening and tweaks of the tax regime.

The rules regarding the qualifying criteria for the forthcoming Tax Free Childcare, due to come into effect in early 2017, were tightened. The Government plans to lower the upper income limit per parent from the originally proposed £150,000 to £100,000 and increase the minimum income level per parent from the equivalent of eight hours to 16 hours at the national living wage.

Richard Whitelock, senior tax consultant at Yorkshire accountancy firm Garbutt and Elliott, said: “It is worth remembering that the new Tax Free Childcare scheme is due to replace the current Childcare Voucher scheme in early 2017, with the promise that any existing voucher schemes can continue for as long as employers continue to provide them.

“Whilst there are winners and losers under both schemes, one key point to note is that the Tax Free Childcare scheme only applies where both parents are working. Our advice is for employers to consider setting up voucher schemes for their employees before it is too late, and for parents – and parents-to-be – to review the merits of both schemes given their own circumstances in order to determine which scheme is best for them.”

The Chancellor has put the brakes on plans to drop the 3% supplement that is applied when calculating the taxable benefit for company cars and fuel. The measure, which was to happen next April, has been delayed until 2021.

“The rationale for having the 3% diesel supplement was recognition that, whilst diesel engines produce lower CO2 emissions – the benchmark used for calculating company car and fuel P11D benefits – they produce other harmful emissions,” said Mr Whitelock.

“Given the advance notice of the supplement scrapping back in March 2012, many businesses and employees will have factored this into their company car decision making in recent years. So aborting the removal of the supplement at such a late stage will be a major and costly blow to both employers and employees, who will have to suffer higher car and fuel taxation for several more years.”

An amendment is also being made to Capital Gains Tax (CGT) that will mean, from April 2019, anyone selling residential property will be required to make a payment on account of the tax due on the disposal of residential property within 30 days of the completion of the disposal. Gains qualifying Private Residence Relief, that is, properties that qualify as the main home, will not be affected.


If you would like any further information on this topic, please contact Richard Whitelock or – 01904 464 100