Company Car tax. 2013/2014. IncludIng details of the 2013 emissions-based reforms, VehIcle excise duty and national Insurance. Whilst 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, 1 December 2013
INTRODUCTION. Implementation of the capital allowance reforms announced in Budget 2012, two new BIK tax bands from April 2015 affecting the taxation of ultra-low emitting vehicles (ULEVs), revised Vehicle Excise Duty rates and the cancellation of the planned 3% rise in fuel duty scheduled for September were the key messages in Budget 2013. Furthermore, the Chancellor indicated the future direction of the emissionsbased company car tax system, with a vision for future years up to 2020. Following unilateral industry demands for company car tax information to be made available earlier, the Chancellor committed to announcing company car tax rates three years in advance, and will review incentives for ULEVs in 2016 in the light of market developments. It s good news for the fledgling market for pure electric cars, and goes some way to alleviating the controversy over the ending of the five-year exemption from BIK tax for zero-emitting cars, scheduled for 2015. In other developments, the Budget announced a rise in the car and van fuel benefit charges for 2013/14, and a freeze on the flat rate tax charge used for calculating BIK tax for vans. All will be subject to a Retail Price Index-linked rise in April 2014. This guide examines Budget 2013 in detail.
VEHIClE ExCISE DUty. The existing 13-band Vehicle Excise Duty (VED) structure remains in place for 2013/14, with most rates rising in line with the Retail Price Index from April 1, 2013. The new rates are shown in the table. Cars in Band H and above attract a Showroom Tax of up to 575 in the first year, while the standard rates for cars in Bands B and C are unchanged from 2012/13. New cars with CO 2 emissions of up to 100g/km are 100% exempt from VED in 2013/14, while those with CO 2 emissions of 130g/km or less are exempt from first year VED. VED bands: 2013/14 VED Band CO2 emissions (g/km) 2013/14 First year rate 2013/14 2 Standard rate A Up to 100 0 0 B 101-110 0 20 C 111-120 0 30 D 121-130 0 105 E 131-140 125 125 F 141-150 140 140 G 151-165 175 175 H 166-175 285 200 I 176-185 335 220 J 186-200 475 260 K 1 201-225 620 280 L 226-255 840 475 M Over 255 1,065 1: Includes cars emitting over 225g/km registered between 1 March, 2001 and 23 March, 2006. 2: Alternative fuel discount 2013/14: 10 for all cars.
Company Car tax. Company car tax liability is calculated according to the Benefit in Kind sliding scale percentage chart, right. For 2013/14, cars with CO 2 emissions of 1-75g/km are taxed at 5%, while the threshold for the 10% rate applies to cars with CO 2 emissions of 75-94g/km. A two percentage point reduction, to a maximum of 37%, will apply in 2015/16 and 2016/17. A new 5% rate of BIK tax (8% for diesels) is introduced for cars with CO 2 emissions of 0-50g/km from April 2015. From the same date, cars with CO 2 emissions of between 51-75g/km attract a tax rate of 9% (12% for diesels). The 3% diesel tax charge is abolished from April 2016. To calculate tax liability you need to know the car s CO 2 emissions, P11D value and if it is a diesel. CO 2 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 www.vcacarfueldata.org.uk/search Taxable percentages of P11D value Vehicle CO2 (g/km) BIK % 2013/14 BIK % 2014/15 BIK % 2015/16 0 0 0 5 (8) 1-50 5 5 5 (8) 51-75 5 5 9 (12) 76-94 10 (13) 11 (14) 13 (16) 95-99 11 (14) 12 (15) 14 (17) 100-104 12 (15) 13 (16) 15 (18) 105-109 13 (16) 14 (17) 16 (19) 110-114 14 (17) 15 (18) 17 (20) 115-119 15 (18) 16 (19) 18 (21) 120-124 16 (19) 17 (20) 19 (22) 125-129 17 (20) 18 (21) 20 (23) 130-134 18 (21) 19 (22) 21 (24) 135-139 19 (22) 20 (23) 22 (25) 140-144 20 (23) 21 (24) 23 (26) 145-149 21 (24) 22 (25) 24 (27) 150-154 22 (25) 23 (26) 25 (28) 155-159 23 (26) 24 (27) 26 (29) 160-164 24 (27) 25 (28) 27 (30) 165-169 25 (28) 26 (29) 28 (31) 170-174 26 (29) 27 (30) 29 (32) 175-179 27 (30) 28 (31) 30 (33) 180-184 28 (31) 29 (32) 31 (34) 185-189 29 (32) 30 (33) 32 (35) 190-194 30 (33) 31 (34) 33 (36) 195-199 31 (34) 32 (35) 34 (37) 200-204 32 (35) 33 (35) 35 (37) 205-209 33 (35) 34 (35) 36 (37) 210-214 34 (35) 35 (35) 37 (37) 215-219 35 (35) 35 (35) 37 (37) 220+ 35 (35) 35 (35) 37 (37) Figures in brackets apply to diesels
Capital allowances & lease rental restrictions. Company car purchases by businesses are eligible for capital allowance write down, where the capital outlay can be offset against corporation tax. Capital allowances favour those cars with low CO 2 emissions and were reformed in April 2009 to reflect a car s CO 2 emissions. From April 1, 2013, main rate capital allowances, for cars with CO 2 emissions of between 96g/km and 130g/km inclusive, are set at 18% a year, while the special rate allowance, for cars with CO 2 emissions of 131g/km or more, is set at 8% a year. First year allowance From April 1, 2013, until March 31, 2015, a 100% first-year capital allowance applies to cars with CO 2 emissions of 95g/km or less. The Budget announced a three year extension of the 100% allowance until March 31, 2018, but from April 1, 2015, the threshold reduces to 75g/km. Zero-emission electric cars and vans are also eligible for a 100% firstyear allowance. Leased cars are exempt from the first-year allowance. 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. From April 1, 2013, 100% of the lease payments on new cars with CO 2 emissions of 130g/km or less can be offset against taxable profit. For new cars with CO 2 emissions of 131g/km or more, only 85% is claimable.
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 2013/14. For the free fuel calculation, the fuel benefit multiplier rate of 20,200 is used, unchanged from 2012/13 but subject to a Retail Price Index-linked rise in April 2014. Calculating Class 1A NIC cars A BMW 116d ES 5dr, with a P11D price of 20,470 and CO 2 emissions of 109g/km, attracts a tax charge of 16% of its P11D value in 2013/14. 20,470 x 16% gives a taxable value of 3,275. Multiplying by 13.8% derives the annual Class 1A NIC due 451. Calculating Class 1A NIC free fuel The same BMW 116d ES has a tax charge of 16% of its P11D value in 2013/14. 20,200 x 16% gives a taxable value of 3,232. Multiplying by 13.8% derives the annual Class 1A NIC due 446. For further information on Class 1A NIC on car and fuel benefits, click here.
Business mileage, private car The HMRC approved rates for business mileage reimbursement in a private car are shown below for 2013/14. 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 2013/14 All cars Up to 10,000 miles 45p Over 10,000 miles 25p Fuel allowances. The free fuel benefit Benefit-in-Kind tax is payable by drivers receiving employer-provided free fuel for private mileage. Budget 2013 announced the charge rate for the calculation of BIK tax rises to 21,100 in 2013/14, and will be subject to a Retail Price Index-linked rise in April 2014. Calculating tax due on free fuel With its combined fuel consumption of 62.8mpg and CO 2 emissions of 109g/km, a BMW 316d ES has a tax percentage of 16% in 2013/14. 21,100 x 16% gives a taxable value of 3,376. When multiplied by the driver s marginal tax rate, liabilities are 675 (20% tax payer), and 1,350 (40% tax payer). With the average price of diesel at 6.59/gal ( 1.45/litre March 2013), 675 will buy 102 gallons for a 20% tax payer or 204 gallons for a 40% tax payer. Multiplying by the 316d ES s combined fuel consumption figure of 62.8mpg gives 6,405 miles for a 20% tax payer, or 12,811 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.
a mini summary. The key to cost-effective motoring in your company car is to select low CO 2 emissions which will help keep your company car tax bills down. Thankfully, MINI has a model range that delivers. Take the MINI One D Hatch with its punchy 90hp 1.6 diesel engine and CO 2 emissions of just 99g/km, for example. It s good for a 0-62mph time of a spirited 11.4secs and is bursting with youthful get-up-and-go. And with combined cycle fuel consumption of up to 74.3mpg, you ll save money at the pumps too. With prices starting from 14,540 on the road, it means you ll pay monthly company car tax of just 33 if you are a 20% tax payer, or 67 if you pay income tax at 40%. Oh, and you can forget about a windscreen tax disc with the MINI One D you ll be exempt from road tax in 2013.