Summer Budget 2015

  • fleet management budget 2016

New VED system and fuel duty freeze in emergency Budget

Chancellor George Osborne, delivering the first Conservative Budget in 18 years, announced a new system for Vehicle Excise Duty to create a new roads fund by 2020, while confirming the Treasury will continue the fuel duty freeze.

In his emergency Budget speech, the Chancellor said fuel duty would be frozen for the rest of this year in line with the Budget in March but did not announce a further cut.

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

However, the major change of interest to fleet operators was the creation of a new Vehicle Excise Duty mechanism that would be used to fund new roads. VED currently raises around £6bn for the Exchequer.

Increased spending on roads was announced in the last Budget, but the Chancellor said that we “need a long-term solution if we are going to fix Britain’s poor roads”.

As car buyers opt for the latest technologies that deliver increasingly lower carbon emissions, by 2017 three-quarters of new cars won’t pay VED, said the Chancellor, adding: “This is not sustainable and it isn’t fair.”

Instead from April 2017, a new VED system will be introduced and will be used for a roads fund by the end of the decade.

While there will be no change to VED for existing cars, for all new cars the duty in the first year will be set according to emissions, like today, but updated for new technology. Thereafter, there will be three duty bands – zero emission, standard and premium.

For standard cars – which covers 95% of all cars sold in the UK – the charge from 2017 will be a flat rate £140 a year. This is less than the average £166 that motorists pay today, but the new system is expected to only raise the same amount of revenue as today but, said the Chancellor, “the revenue will be secure for the long term”.

He added: “From the end of this decade, every single penny raised in Vehicle Excise Duty in England will go into that fund to pay for the sustained investment our roads so badly need.”

VED bands and rates for cars first registered on or after April 1 2017

CO2 emissions (g/km)First year rateStandard rate 
0£0£0
1-50£10£140
51-75£25£140
76-90£100£140
91-100£120£140
101-110£140£140
110 -130£160£140
131-150£200£140
151-170£500£140
171-190£800£140
191-225£1200£140
226-255£1700£140
Over 255£2000£140

 

Cars with a list price of above £40,000 will attract a supplement of £310 per year for the first five years in which the standard rate is paid.

In other Budget announcements:

  • The Government will also consult on extending the length of time a new car has before it has its first MOT test from three years to four years, which would save motorists over £100m a year .
  • The Government will publish a second road investment strategy by the end of this parliament.
  • The Government committed £14 million to local road improvements.
  • The Government is also improving road connectivity in the north by upgrading the A628 and the A61, and by upgrading the final stretch of the M1/A1 route between Newcastle and London to motorway.
  • The Government will legislate to apply a reduced rate of fuel duty to aqua-methanol in Finance Bill 2016.

Company car tax

There was no change to BIK taxation rates for company cars in the emergency Budget. As signposted previously by the Chancellor, company car tax goes up by 2% for the current 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).

Vehicle CO2
g/km
2015-16
% BIK Rate
2016-17
% BIK Rate
2017-18
% BIK Rate
2018-19
% BIK Rate
2019-20
% BIK Rate
PetrolDieselAll fuelsAll fuelsAll fuelsAll Fuels
1-5058791316
51-7591211131619
76-94131615171922
95-99141716182023
100-104151817192124
105-109161918202225
110-114172019212326
115-119182120222427
120-124192221232528
125-129202322242629
130-134212423252730
135-139222524262831
140-144232625272932
145-149242726283033
150-154252827293134
155-159262928303235
160-164273029313336
165-169283130323437
170-174293231333537
175-179303332343637
180-184313433353737
185-189323534363737
190-194333635373737
195-199343736373737
200-204353737373737
205-209363737373737
210-214373737373737
215-219373737373737
220-224373737373737
225-229373737373737
230 or above373737373737

 

 

 

 

By |July 8th, 2015|Categories: Business news, Fleet|Comments Off on Summer Budget 2015