SPOTLIGHT ON BUDGET A summary of the key facts from the Chancellor s Budget Statement of 16 March 2016 DRIVING INTELLIGENCE

Transcription

1 SPOTLIGHT ON BUDGET 2016 A summary of the key facts from the Chancellor s Budget Statement of 16 March 2016 DRIVING INTELLIGENCE

2 ABOUT US Chancellor George Osborne delivered the Budget Statement on 16 March The Lex Autolease Fleet Consultancy Team has analysed its contents and has summarised the implications for fleets and company motorists. We have included the main personal and corporate tax rates in this interactive guide, we hope you find them useful. Lex Autolease manages over 317,000 cars and vans on behalf of its customers and offers a full range of fleet funding options including Contract Hire, Contract Purchase, Finance Lease and Employee Car Ownership schemes. Lex Autolease Fleet Consultancy incorporates a specialist consultancy unit to help organisations gain greater value for their company vehicles. It specialises in conducting focused assessments of larger fleets to identify cost saving opportunities, performance improvement options and strategies for future car benefit and van provision. Lex Autolease prides itself on bringing fresh ideas to organisations and helping them implement programmes to realise the benefits. FOR MORE INFORMATION: Call: fleetconsultancy@lexautolease.co.uk Visit: While every effort has been made by Lex Autolease to ensure that the information given is not misleading, this material is provided only as an overview of the subject at the time of publication and is not a substitute for professional advice. No responsibility can be accepted by Lex Autolease for any loss or liability occasioned by any person acting or refraining from action as a result of this guide. Rates are subject to legislative approval. 1

3 COMPANY CAR TAXATION CO 2 emissions (g/km) Taxable percentage of list price* 2016/ / / / CO 2 emissions (g/km) Taxable percentage of list price* 2016/ / / / or over Emission figures for vehicles are rounded down. Diesel supplements: * add 3% subject toa maximum charge of 37%. 2

4 CAR BENEFIT CHARGE The calculation for a car benefit charge is as follows: Step 1 Step 2 Step 3 Taxable list price (plus the price of any accessories) minus capital contributions by the employee Take the adjusted figure from Step 1 and multiply by the appropriate percentage based on CO 2 emissions (used in the table) ** ** Adjust for any periods where the car is not available for private use. Minus contributions made by the driver for the private use of the car 3

5 COMPANY VAN TAXATION Van benefit charges where a van is used for private use (other than some home to work travel). Tax year Scale charge 2016/17 3,170 # # An additional 598 charge for 2016/17 applies if private fuel is also provided. From 6 April 2016 until 5 April 2018, the Van Benefit Charge (VBC) for zero-emission vans (electric vans) will be 20% of the charge for conventionally fuelled vans for the tax years. This will be followed by 40% in 2018/19, 60% in 2019/20, 80% in 2020/21 and 90% in 2021/22 with the rates equalised in 2022/23. Zero emissions means vehicles incapable of producing CO 2 emissions under any conditions when driven. 4

6 COMPANY CAR PRIVATE FUEL The Fuel Benefit Charge multiplier for private fuel provided for company cars is 22,200 for 2016/17. The Fuel Benefit Charge is calculated by applying the appropriate percentage, as per the calculation for the company car benefit charge, to 22,200. From 6 April 2016 onwards the fuel benefit multiplier will increase by RPI for cars. 5

7 CAPITAL ALLOWANCES Vehicle type CO 2 emissions (g/km) Writing-down allowance 2016/17 75 and below 100% Car 76 to % 131 and above 8% Commercial Any CO 2 18% Businesses are able to claim 100% first year allowances for cars with CO 2 emissions below a threshold, as specified above (excluding expenditure on vehicles for leasing). This allowance will be in place until 31 March The Annual Investment Allowance (AIA) is a 100% writing-down allowance, whose limit is currently 425,000 ## and has reduced to a permanent limit of 200,000 per annum on 1 January This can be used for purchase based funding types including Contract Purchase for vans but not cars. ## Financial year encompasses two AIA periods. The 425,000 is calculated as 9 months at 500,000 and 3 months at 200,000. 6

8 LEASE RENTAL RESTRICTION Lease rentals are normally an allowable expense for businesses which can be deducted against their corporation or income tax charge. From 1 April 2009 a percentage restriction applies to the finance element of the lease where CO 2 emissions exceed a g/km threshold, as specified below. This replaced expensive car lease disallowance. Cars delivered after 1 April 2009 Cars delivered after 1 April 2013 Restriction % CO 2 threshold 15% % 130 7

9 VEHICLE EXCISE DUTY (VED) With effect from 1 April Cars registered pre 1 March 2001 (pre-graduated VED): Engine size 2016/17 1,549cc and below 145 Over 1,549cc 235 Vehicles registered on or after 1 March 2001: VED band CO 2 emissions (g/km) 2016/2017 First year rate Standard rate A Up to B C D E F G VED band CO 2 emissions (g/km) 2016/2017 First year rate Standard rate H I J K L M Over 255 1, From 1 April 2017 the VED for cars registered from this date will change. The first year rate of VED will vary according to the CO 2 emissions of the car. A flat Standard Rate (SR) of 140 will apply in all subsequent years, except for zero-emission cars for which the SR will be 0. Cars with a list price above 40,000 will attract a supplement of 310 for the first five years in which a SR is paid. 8

10 MILEAGE RATES Approved mileage rates for private cars and vans (pence per mile) Engine size Up to 10,000 miles Excess over 10,000 miles All cars and vans 45p 25p The rates are reviewed four times a year. Any changes will take effect at the beginning of each calendar quarter on 1 March, 1 June, 1 September and 1 December. These will be published on the HM Revenue & Customs (HMRC) website shortly before the date of change. Company car advisory fuel rates (pence per mile ) Engine size Petrol Diesel LPG 1,400cc or less 10p 8p 7p 1,401cc 1,600cc 12p 8p 8p 1,601cc 2,000cc 12p 10p 8p Over 2,000cc 19p 11p 13p Effective 1 March

11 MAIN TAX RATES AND ALLOWANCES Corporation tax 2016/ / / /2020 Main Rate 20% 19% 19% 19% The main rate will be reduced by a further 2% to 17% for the financial year beginning 1 April Value Added Tax (VAT) 2016/17 Standard rate 20% Main personal allowances 2015/2016, 2016/2017, 2017/2018, Born after 5 April ,600 11,000 11,500 Born before 6 April ,660 11,000 11,500 Income limit for age related allowances 27,700 N/A N/A The personal allowance reduces where the individual s income is above 100,000 by 1 for every 2 of income above the limit. This reduction applies irrespective of age. Income tax bands 2015/16, 2016/17, 2017/18, Basic rate (20%) 0 31, , ,500 Higher rate (40%) 31, ,000 32, ,000 33, ,000 Additional rate (45%) Over 150,000 Over 150,000 Over 150,000 National Insurance 2015/ /17 Class 1 (employment) Weekly earnings primary threshold Weekly earnings secondary threshold Employee s rate p/w excess over p/w excess over 827 Employer s rate % 2% 12% 2% excess over 156 p/w 13.8% 13.8% 10

12 ULTRA LOW EMISSION VEHICLES From 1 March 2016, plug-in car grant levels for Ultra Low Emission Vehicles (ULEV) are changing. The new grant levels are based on the environmental performance of the vehicle, with ultra low emission vehicles placed into categories on the basis of their CO 2 emissions and their zero emission range. The following rates apply: Category Definition Grant 1 CO 2 emissions of less than 50g/km and a zero emission range of at least 70 miles 2 CO 2 emissions <50g/km and a zero emission range between 10 and 69 miles 3 CO 2 emissions of 50-75g/km and a zero emission range of at least 20 miles 4,500 2,500 2,500 11

13 OTHER TAX MATTERS Interest free loans The threshold for interest free loans provided by employers to employees is 10,000. The official rate of interest is currently 3%. The official rate of interest is used in calculating the benefit-in-kind charge on beneficial loans to employees. National Insurance Contributions (NIC) From April 2016 no Employer NIC for under 21 year olds earning less than 827 per week is due. Plant and machinery: Lease Accounting changes The government will publish a discussion document in spring 2016 with options for change to the tax treatment of leases of plant and machinery in response to the International Accounting Standards Board s new lease accounting standard. 12