2015 BUDGET REPORT arval.co.uk
Contents Company Car Tax Company Car Benefit-In- Kind Bandings Roads Crossings Vehicle Tax Vehicle Excise Duty Fuel Benefit Charge Van Benefit Charge Autonomous Car Funding 3 3 4 4 4 5 5 5 This report brings you relevant fleet highlights from the 2015 Budget, the last before the general election. It includes the latest Benefit In Kind (BIK) tables and Vehicle Excise Duty (VED) as well as an explanation of all the tax changes which are likely to impact your vehicle fleet and your drivers. Overview The Chancellor unveiled a mixed Budget for fleets and company car drivers with savings in some areas and tax increases in others. Topping the list was a three percentage point increase from 2019 for all company car tax bands, including the lowest emitting vehicles. However, the Chancellor continued the freeze on the fuel duty escalator tax which means in September there will not be a rise in petrol or diesel prices due to taxation. Mr Osborne also revealed a raft of tax breaks for the North Sea oil industry which he hoped would also contribute to a continuation of relatively low forecourt fuel prices. As has now become almost automatic, Fuel Benefit Charge and VED will both continue to increase by the Retail Price Index (RPI). There was no new money announced for Britain s roads in addition to the major investment recently announced. However, the Chancellor did reveal that after 2018 the toll to use the Severn River Crossings would be reduced by the level of VAT and that Light Commercial Vehicles (LCVs) would be charged the same rate as cars. Beyond vehicles and transport, Mr Osborne revealed he would scrap the need for individuals to complete an annual tax return. Instead he offered a connected online system that will automatically update but did not explain how company car taxation calculations would factor in the new system. 2 2015 Budget Report
Company Car Tax Keeping his commitment to give as much notice of company car tax changes as possible, the Chancellor revealed a three percentage point increase for all types of cars in the 2019/20 tax year. The increase across all BIK bands means that the Government has reversed the decision made last year, to close the three percentage point gap between the bottom two BIK CO 2 bands (0-50g/km and 51-75g/km), and all other bands. The 2015 Budget keeps the gap at three percentage points. The increase is expected to boost Treasury income by 340 million in the 2019/20 tax year, according to the Budget document. The impact of the increase is that from April 2019, the minimum BIK band will be 16% for cars emitting 0-50g/km CO 2. All company cars emitting 165g/km CO 2 and above will sit in the maximum 37% tax band. Also worthy of note is that from April this year, the CO 2 band for zero emission vehicles is rolled into the band above making it a 0-50g/km tax band. This scraps the 0% tax rating for fully electric cars. However, the Chancellor s Budget documentation added: Key point 3% The Government remains committed to reviewing incentives for Ultra Low Emission Vehicles in light of market developments at Budget 2016, to inform decisions on company car tax from 2020-21 onwards. company car tax increase for all types of cars in the 2019/20 tax year. Company Car Benefit-In-Kind Bandings CO 2 emissions 2015/2016 petrol 2016/2017 2017/2018 2018/2019 2019/2020 0-50 5 7 9 13 16 51-75 9 11 13 16 19 76-94 13 15 17 19 22 95-99 14 16 18 20 23 100-104 15 17 19 21 24 105-109 16 18 20 22 25 110-114 17 19 21 23 26 115-119 18 20 22 24 27 120-124 19 21 23 25 28 125-129 20 22 24 26 29 130-134 21 23 25 27 30 135-139 22 24 26 28 31 140-144 23 25 27 29 32 145-149 24 26 28 30 33 150-154 25 27 29 31 34 155-159 26 28 30 32 35 160-164 27 29 31 33 36 165-169 28 30 32 34 37 170-174 29 31 33 35 37 175-179 30 32 34 36 37 180-184 31 33 35 37 37 185-189 32 34 36 37 37 190-194 33 35 37 37 37 195-199 34 36 37 37 37 200-204 35 37 37 37 37 205-209 36 37 37 37 37 210+ 37 37 37 37 37 For diesel models add three bands, up to a maximum 37% banding until the end of 2015-16 tax year. 3 2015 Budget Report
Key point No new funding for UK road infrastructure. Roads Crossings The Chancellor did not announce any new funding for the UK road infrastructure in addition to the major investment recently announced. However, he did promise to lower the cost of the Severn River Crossings. The changes will come into effect when the crossings are in public ownership post- 2018. Mr Osborne said he would remove VAT from the price of the crossings to reduce the toll and also roll the LCV rate into that for cars. This could see the cost of a van crossing drop from today s 13.10 to less than 6.50 the current cost for a car crossing. Key point Only higher emitting cars will see a rise in road tax. Vehicle Tax For the majority of cars VED will remain unchanged in 2015. While the Budget raised VED in line with the RPI, the impact on the real-world figures was minimal due to recently falling RPI which currently sits at 1.1%. As a result, only higher emitting cars will see any rise in road tax. There are no changes in the rates for cars with emissions up to 165g/km CO 2. Cars registered for the first time from April 2015 with emissions above 165g/km, will see rises of between 5 and 10 in the annual charge. Cars registered before April 2015 with a CO 2 figure above 200g/km to see a 5 increase to their annual VED bill. Vehicle Excise Duty VED Band CO 2 (g/km) 2015-16 standard 2015/16 first year A Up to 100 0 0 B 101-110 20 0 C 111-120 30 0 D 121-130 110 0 E 131-140 130 130 F 141-150 145 145 G 151-165 180 180 H 166-175 205 295 (+5) I 176-185 225 350 (+5) J 186-200 265 490 (+5) K 201-225 290 (+5) 640 (+5) L 226-255 490 (+5) 870 (+10) M Over 255 505 (+5) 1100 (+10) 4 2015 Budget Report
Fuel Benefit Charge For any company car drivers still taking free fuel, the benefit charge will again increase in April. The 2015 increase will be 400 which will see the Fuel Benefit Charge (FBC) hit 22,100. From April 2016, the Government plans to increase the FBC in line with Car fuel benefit multiplier the Retail Price Index. The changes to legislation to allow this will be introduced in time for tax codes issued in January 2016. The van fuel benefit will also increase this April to 594 and as with cars, will be linked to the RPI from the 6th April 2016. Van fuel benefit multiplier Year Amount Year Amount 2014-2015 21,700 2015-2016 22,100 2014-2015 581 2015-2016 594 Key points Car and van fuel benefit charges increase in April 2015. Van Benefit Charge The Van Benefit Charge (VBC) will increase by 60 in the next tax year. However, for 2016, the Government plans to bring in regulations to increase the VBC in line with inflation with effect from the 6th April 2016. According to the Budget document the increase will be based on the September 2015 RPI figure. The change will be introduced later in 2015, in time for tax codes issued in January 2016. The Chancellor also confirmed that zero emission vans currently rated at a zero charge for the current tax year will have their rating increased over the coming years. Next year the rating will be 20% of the regular VBC, rising to 40% in 2016-2017, 60% in 2017-2018, 80% in 2018-19 and 90% in 2019-20. From 2020-21, there will be a single van benefit charge applying to all vans. Van benefit charge Year Amount 2014-2015 3,090 2015-2016 3,150 Key points 100m in funding to research connected and autonomous cars. Autonomous Car Funding The Government will provide the automotive industry with 100 million in funding to research both connected cars and also autonomous cars, according to the Chancellor. The funding will be matched by the industry itself, according to Mike Hawes, the Society of Motor Manufacturers and Traders (SMMT) chief executive. The 100 million injection will provide a vital boost to the UK automotive industry and put us ahead in the global race to build the cars of the future. It lays the foundations for the UK to become a centre of excellence in intelligent mobility, and underlines the importance of automotive engineering to the UK economy, he added. 5 2015 Budget Report
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