Including details of the 2015 emissions-based changes, Vehicle Excise Duty and fuel allowances.

Transcription

1 BMW Fleet & Business Sales bmwcorporate.co.uk The Ultimate Driving Machine Company Car tax. 2015/2016. Including details of the 2015 emissions-based changes, Vehicle Excise Duty and fuel allowances. Whille we have made every effort to ensure the information in this document is accurate, BMW (UK) Ltd can accept no liability for your reliance on any information contained in it. You should seek your own independent financial advice in relation to any taxation or accounting matters referred to in this document. Information correct at date of publication, March 18, 2015

2 Introduction. The 2015 Budget on March 18 clarified the future of the CO2 based Benefitin-Kind (BIK) tax rules for company car drivers, with a two percentage point rise in company car tax bands applying from April 6, 2015, and details of the bandings and rates confirmed for 20/20. A key change for 2015/16 is that drivers of zero-emission electric cars, become liable for company car tax in April, having previously been exempt. Elsewhere, Vehicle Excise Duty (VED) rates increase for cars with CO2 emissions of 166g/km or more, with associated rises in Showroom Tax adding up to 595 to the on-the-road prices of qualifying cars. Looking ahead, the abolition of the 3% diesel tax charge in April 2016 enables drivers of diesel cars to be taxed at the same lower rates as petrol car drivers. The change means drivers of diesel cars with CO2 emissions of up to 9g/km can look forward to a reduction in their BIK tax liability in 2016/17 compared with 2015/16. The Budget also brought in a further rise in the fuel benefit charge, used for calculating tax on free fuel provided for private mileage, and the Chancellor cancelled the 0.54p/litre fuel duty rise planned for this September. This Guide examines the implications of the Budget for fleet operators and drivers.

3 Vehicle excise duty. A rise in Vehicle Excise Duty (VED) rates applies to cars in Band H and above those with CO2 emissions from 166g/km from April 1, The new rates are shown in the table. Cars with CO2 emissions of up to 100g/km (Band A) remain exempt from VED in 2015/16. Those with CO2 emissions of 101 1g/km (Bands B-D) are exempt from first year VED. The standard and first-year rates for cars with CO2 emissions of 101g/km to 165g/km are unchanged from 2014/15. Cars with CO2 emissions of 166g/km and above (Bands H-M) are subject to a showroom tax increase in the first year 5 for Bands H-K and 10 for Bands L-M, while standard rates rise by 5 for cars in Bands K-M. VED bands and rates: 2015/16 VED CO / / /16 Band emissions First year Standard Showroom (g/km) rate rate tax A Up to B C D E F G H I J K L M Over 5 1, : Includes cars emitting over 2g/km registered before March, /16 alternative fuel discount: 10. New rates apply from April 1, 2015 BMW EfficientDynamics comprises a range of advanced technologies designed to save fuel and reduce CO 2 emissions in every BMW car. Technologies that include Auto Start- Stop, Electric Power Steering, Brake Energy Regeneration and Reduced Rolling Resistance Tyres. All are fitted as standard on many BMW models, resulting in CO 2 emissions as low as 89g/km and combined fuel consumption of up to 83.1mpg. Combined with advanced Lightweight Engineering that reduces the car s weight for enhanced driving dynamics, and even the use of special Low- Friction Fluids in the drivetrain, BMW EfficientDynamics defines our approach to building cleaner, more cost-efficient and rewarding company cars. BMW EfficientDynamics Less emissions. More driving pleasure.

4 Taxable percentages of P11D value CO2 (g/km) / / /18 5 (8) 9 (12) 13 (16) 14 (17) 15 (18) 16 () 17 (20) 18 (21) () 20 () 21 () () () () () () () () () () () () () () () () () () () / 20/ Figures in brackets apply to diesels. Diesel hybrids are exempt from the 3% diesel charge in 2015/16. 2 In April 2016 the 3% diesel charge is abolished Company car tax. Company car Benefit-in-Kind (BIK) tax rates for 2015/16 to 2018/ are shown in the chart, above right. For 2015/16, cars with CO2 emissions of 0-50g/km qualify for BIK tax at 5% (8% for diesels), while those with CO2 emissions of 51-75g/km qualify in the 9% band (12% for diesels). The rate for cars with CO2 emissions of 95-99g/km is 14% (17% for diesels). Diesel hybrids are Home Introduction exempt from the 3% diesel tax charge. From April 2016, the 3% diesel tax charge is abolished, and drivers of diesel cars with CO2 emissions up to 9g/km will see a reduction in liability compared with 2015/16. To calculate your BIK tax liability in 2015/16, you need to know your car s CO2 Vehicle Excise Duty Company Car Tax emissions, P11D value and whether or not it is a diesel model. CO2 emissions information and a Company Car Tax calculator is available for all BMW cars by clicking here or by visiting the Vehicle Certification Agency website at Capital Allowances Example: BIK tax liability in 2015/16 A BMW 116d EfficientDynamics Plus 5dr has a P11D price of,505 and CO2 emissions of 89g/km, putting it in the 16% BIK band in 2015/16.,505 x 16% gives a taxable value of 3,600, equating to yearly BIK tax of 720 ( 60 a month) for a 20% tax payer, or 1,440 a year ( 120 a month) for a 40% tax payer. Class1A NIC Fuel Allowances Exit

5 Capital allowances & lease rental restriction. Company car purchases by businesses are eligible for capital allowance write down allowances, where the capital outlay can be offset against corporation tax. Capital allowances favour those cars with CO2 emissions of 1g/km or less and were reformed in April 2009 with the threshold between main and special rates set at 1g/km. In 2015/16, main rate capital allowances, for cars with CO2 emissions of between 76g/km and 1g/km inclusive, are set at 18% a year, while the special rate allowance, for cars with CO2 emissions of 1g/km or more, is 8% a year. 100% first year allowance A 100% first-year capital allowance (FYA) applies to cars with CO2 emissions of 75g/km or less until March, Zeroemission electric cars are also eligible for a 100% first-year allowance, but leased cars are not eligible to claim the FYA. Lease rental restriction The amounts payable on lease rentals are normally an allowable expense for businesses that can be deducted against their corporation or income tax charge, with the threshold set at 1g/km. For 2015/16, new cars with CO2 emissions of 1g/km or less are eligible for 100% of their lease payments to be offset against corporation tax, while for those with CO2 emissions of 1g/km or more, only 85% is claimable.

6 National insurance contributions. Class 1A national insurance is payable by the employer on the company car benefit and free fuel provided for private use at the rate of 13.8% in 2015/16. For the free fuel calculation, the 2015/16 fuel benefit charge rate of,100, up from 21,700 in 2014/15, applies to the car's taxable value. Calculating Class 1A NIC cars A BMW 116d EfficientDynamics Plus 5dr, with a P11D price of,505 and CO2 emissions of 89g/km, attracts a tax charge of 16% of its P11D value in 2015/16.,505 x 16% gives a taxable value of 3,600. Multiplying by 13.8% derives the annual Class 1A NIC due 496. Calculating Class 1A NIC free fuel The same BMW 116d EfficientDynamics Plus 5dr has a tax charge of 16% of its P11D value in 2015/16. Multiplying the fuel benefit charge figure of,100 x 16% gives a taxable value of 3,5. Multiplying by 13.8% derives the annual Class 1A NIC due 487. For further information on Class 1A NIC on car and fuel benefits, click here.

7 Business mileage, private car The HMRC approved rates for business mileage reimbursement in a private car are shown below for 2015/16. The rates are the tax and NIC-free amounts claimable per mile by a driver using his/her own car on business. Authorised Mileage Allowance Payments (AMAP) rates 2015/16 All cars Up to Over 10,000 miles 10,000 miles 45p p Fuel allowances. The free fuel benefit BIK tax is payable by drivers receiving employer-provided free fuel for private mileage in their company cars. To work out the tax due on employerprovided free fuel for private mileage in a company car, the 2015/16 fuel benefit charge rate of,100 is used. Home Introduction Calculating tax due on free fuel With its combined fuel consumption of 68.9mpg and CO2 emissions of 109g/km, a BMW 0d EfficientDynamics has a BIK tax percentage of % in 2015/16. (20% tax payer), and 1,679 (40% tax payer). With the average price of diesel at 5./gal or 1.17/litre (March 2015), 839 will buy 157 gallons (713 litres) for a 20% tax payer or 5 gallons (1,4 litres) for a 40% tax payer.,100 x % gives a taxable value of 4,9. When multiplied by the driver s marginal tax rate, annual liabilities are 839 Multiplying by the 0d EfficientDynamics combined fuel consumption figure of 68.9mpg gives 10,817 miles for a 20% tax Vehicle Excise Duty Company Car Tax Capital Allowances payer, or 21,703 miles for a 40% tax payer the minimum private mileages you need to cover to make the benefit worthwhile. If you drive fewer private miles than the calculated figures you will be better off paying for private fuel yourself. If you drive more private miles, you are better off paying the tax. Class1A NIC Fuel Allowances Exit