2015 pre-Election Budget | fleet update

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Company car tax rises and fuel duty freeze for fleets in Budget 2015

The 2015 Budget had more than one eye on the General Election in a few weeks time as Chancellor George Osborne announced a series of measures designed to continue the feel-good factor for voters ahead of GE-day on 7 May.

The Chancellor has the benefit of a growing economy, set to increase by 2.5% this year, which allowed him to make a series of voter-friendly fiscal announcements, including an increase in personal allowances to £11,000 in two years’ time.

“A Budget for Britain, the come-back country,” said the Chancellor, referring to an economy that he said was stronger, with a deficit that was down, growth up, jobs up and living standards on the rise.

Regarding measures of interest for fleet operators, there was news of a freeze in fuel duty in September; of a 2% increase in company car tax for the next three years, and 3% thereafter; of new tax bands for ultra-low emission vehicles and of a rise in VED in line with inflation in the Chancellor’s sixth, and perhaps final, Budget speech.

Fuel duty

The Chancellor confirmed that the fuel duty increase planned for September, due to be 0.54p per litre, would be cancelled, a move that was broadly welcomed. The combined impact of the ongoing duty freeze and the shelved increase will mean that the average family will save £10 every time the tank is filled.

“£10 off a tank from the Tories,” said the Chancellor.

In total, the Government says it will have eased the burden on motorists by £22.4 billion by the end of this tax year, a saving of £675 for a typical motorist, £1,400 for a small business with a van, and £21,000 for a haulier.

Government action on fuel duty since 2011 means that by the end of 2015-16 fuel duty will have been frozen for five years, the longest freeze since the mid-1990s.

Company car tax

As signposted previously by the Chancellor, company car tax goes up by 2% for the coming tax year 2015/16, and by the same amount for each of the next three years for all cars emitting more than 75g/km of carbon dioxide, up to a maximum of 37%, (see table).

However, the rate will increase by a further 3% in 2019-20; during this period, the rate for Ultra Low Emission Vehicles (ULEVs) would not rise as quickly.

The Budget also confirmed that two new tax bands for ULEVs come into force from April as ULEVs lose their tax free status for the first time.

The two new tax bands, at 1-50g/km and 51-75g/km of CO2, attract BIK rates of 5% for petrol models and 8% for diesel models for vehicles emitting 1-50g/km of CO2, and 9% for petrol and 12% for diesel for vehicles emitting 51-75g/km.

From next year, 2016/17, when the diesel surcharge is abolished, the tax rates become a standard 7% for all models emitting 1-50g/km and 11% for all models emitting 51-75%. This rises to 9% and 13% respectively in 2017/18, a move which many pundits have called a disincentive for buyers of electric and other ultra-low emission vehicles.

Company Car Tax BIK Rates 2015-2020

Vehicle CO2
g/km
2015-16
% BIK Rate
2016-17
% BIK Rate
2017-18
% BIK Rate
2018-19
% BIK Rate
2019-20% BIK Rate
Petrol Diesel All fuels All fuels All fuels All Fuels
1-50 5 8 7 9 13 16
51-75 9 12 11 13 16 19
76-94 13 16 15 17 19 22
95-99 14 17 16 18 20 23
100-104 15 18 17 19 21 24
105-109 16 19 18 20 22 25
110-114 17 20 19 21 23 26
115-119 18 21 20 22 24 27
120-124 19 22 21 23 25 28
125-129 20 23 22 24 26 29
130-134 21 24 23 25 27 30
135-139 22 25 24 26 28 31
140-144 23 26 25 27 29 32
145-149 24 27 26 28 30 33
150-154 25 28 27 29 31 34
155-159 26 29 28 30 32 35
160-164 27 30 29 31 33 36
165-169 28 31 30 32 34 37
170-174 29 32 31 33 35 37
175-179 30 33 32 34 36 37
180-184 31 34 33 35 37 37
185-189 32 35 34 36 37 37
190-194 33 36 35 37 37 37
195-199 34 37 36 37 37 37
200-204 35 37 37 37 37 37
205-209 36 37 37 37 37 37
210-214 37 37 37 37 37 37
215-219 37 37 37 37 37 37
220-224 37 37 37 37 37 37
225-229 37 37 37 37 37 37
230 or above 37 37 37 37 37 37

 

Vehicle Excise Duty

The Budget confirmed that VED rates for cars, motorcycles and the main rates for vans will increase from 1 April 2015 in line with the RPI.

VED Bands and rates for cars registered on or after 1 March 2001:

 

VED Band CO2 emissions (g/km) Tax year 2015-16Standard rate Tax year 2015-16First year rate
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
I 176-185 £225 £350
J 186-200 £265 £490
K 201-225 £290 £640
L 226-255 £490 £870
M Over 255 £505 £1,100

 

As announced at Budget 2014, the need to have a paper tax disc displayed on a vehicle windscreen as proof of purchase of the appropriate VED has now been consigned to history. Drivers can now pay their VED by direct debit annually, biannually or monthly, should they wish to do so.

Driverless cars

Following recent announcements in which Government-backed initiatives involving driverless cars were revealed in four cities, London, Bristol, Coventry and Milton Keynes, driverless cars were again singled out by the Chancellor for investment: £100 million has been earmarked for research and development into intelligent mobility.

The Treasury said that the cash will be used to focus on enhancing the development of driverless car technology and the systems required to implement and adopt the technology, such as telecommunications.

Enhanced capital allowances and first year allowances (FYA)

The 100% FYA for businesses purchasing the lowest emission vehicles has already been extended until 31 March 2018.

Budget 2015 confirmed that from April, the CO2 emissions threshold below which cars are eligible for the 100% FYA will be reduced from 95g/km to 75g/km.

The case for extending the FYA for cars beyond April 2018 is due to be reviewed at Budget 2016. There will also be a a review of the 130g/km main rate threshold for which Writing Down Allowances are available – at a rate of 18% per annum for cars with CO2 emissions of 96g/km-130g/km and 8% per annum for cars with CO2 emissions above 130g/km.

Last April, the first year allowance was withdrawn from car leasing companies. No further changes are due to be announced until 2016.

Car and van fuel benefit charge 2015-16

From April, the Fuel Benefit Charges, currently £21,700 for cars and £581 for vans, are due to increase by the Retail Prices Index (RPI) for both classes of vehicle.

Van benefit charge 2015-16

After setting the Van Benefit Charge at £3,090 in 2014-15, the Government increased it by the RPI from April 2015. From April, the five year exemption for zero carbon vans from the van benefit charge is already due to expire, as legislated in the Finance Act 2010.

By |March 18th, 2015|Categories: Driving, Fleet|Comments Off on 2015 pre-Election Budget | fleet update