COMPANY CAR TAX. NOVEMBER 2017. Home November 2017 Budget Vehicle excise duty Company car tax Capital allowances Fuel allowances Class 1A NIC ULEV grant CLICK ESC TO EXIT DOCUMENT A GUIDE TO THE NOVEMBER 2017 BUDGET FOR FLEET DECISION MAKERS. While 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. The fuel consumption and CO 2 figures quoted are obtained under standardised EU test conditions (Directive 93/116/EEC) and are for comparative purposes for vehicles fitted with standard wheel and tyre combinations. This allows a direct comparison between different models but may not represent the actual fuel consumption achieved in ‘real world’ driving. CO 2 emissions can change if a different-sized alloy wheel is ordered with the vehicle. This may also lead to a change to the VED payable. More information is available at www.BMW.co.uk and at www.dft.gov.uk/vca. Information correct at date of publication, November 2017 The Ultimate Driving Machine
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COMPANY CAR TAX.NOVEMBER 2017.
Home November 2017Budget
Vehicleexcise duty
Companycar tax
Capitalallowances
Fuelallowances
Class 1ANIC
ULEV grant
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A GUIDE TO THE NOVEMBER 2017 BUDGET FOR FLEET DECISION MAKERS.
While 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. The fuel consumption and CO2 figures quoted are obtained under standardised EU test conditions (Directive 93/116/EEC) and are for comparative purposes for vehicles fitted with standard wheel and tyre combinations. This allows a direct comparison between different models but may not represent the actual fuel consumption achieved in ‘real world’ driving. CO2 emissions can change if a different-sized alloy wheel is ordered with the vehicle. This may also lead to a change to the VED payable. More information is available at www.BMW.co.uk and at www.dft.gov.uk/vca. Information correct at date of publication, November 2017
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INTRODUCTION.Raised BIK tax liabilities for diesel drivers and an increase in Vehicle Excise Duty, with a new ‘showroom tax’ for diesels, were the key points of the 2017 Budget on November 22.
The Chancellor targeted drivers of diesel company cars with a rise in the 3% Benefit-in-Kind diesel tax charge to 4%, applicable from April 6 2018. The diesel VED ‘showroom tax’ measure will add up to a £520 premium at first registration over petrol counterparts, applied to diesel models that do
not comply with the Real Driving Emissions Step 2 (RDE2) standard. Currently, no RDE2-compliant cars are available.
A Retail Price Index-based rise in the vehicle and vehicle fuel benefit charges will also apply from April 6 2018.
The measures were tempered by the Chancellor’s freeze on fuel duty for 2018/19, and there was good news for owners and prospective buyers of electric cars and hybrids with
significant investment announced for the Plug-in Car Grant (PiCG) and electric charge point infrastructure.
The Budget highlights the continuing importance of choosing cars with low emissions of CO2 – the only way to reduce tax liabilities for drivers and fleet operators.
This BMW Guide to the November 2017 Budget examines the implications for fleet operators and company car drivers.
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VEHICLE EXCISE DUTY.
Vehicle Excise Duty: rates for new cars
2017/18 (current year) 2018/19 (from April 1 2018)
CO2 First Standard rate First year rate First year rate Standard rateemissions year (Yr2 on for (compared (for diesel vehicles2 (Yr2 on for(g/km) rate cars with list price with compared with cars with list price of £40,000 or less1) 2017/18) 2017/18) of £40,000 or less1)
0 £0 £0 £0 (+£0) £0 (+£0) £0
1-50 £10 £140 £10 (+£0) £25 (+£15) £140
51-75 £25 £140 £25 (+£0) £105 (+£80) £140
76-90 £100 £140 £105 (+£5) £125 (+£25) £140
91-100 £120 £140 £125 (+£5) £145 (+£25) £140
101-110 £140 £140 £145 (+£5) £165 (+£25) £140
111-130 £160 £140 £165 (+£5) £205 (+£45) £140
131-150 £200 £140 £205 (+£5) £515 (+£315) £140
151-170 £500 £140 £515 (+£15) £830 (+£330) £140
171-190 £800 £140 £830 (+£30) £1,240 (+£440) £140
191-225 £1,200 £140 £1,240 (+£40) £1,760 (+£560) £140
226-255 £1,700 £140 £1,760 (+£60) £2,070 (+£370) £140
Over 255 £2,000 £140 £2,070 (+£70) £2,070 (+£70) £140
1All cars with a list price over £40,000 are liable for a £310 supplement for five years following the first year rate, after which the rate reverts to the standard £140 a year. For cars with zero emissions the rate reverts to £0 after five years. 2 Applies to diesel vehicles that do not meet the real driving emissions step 2 (RDE2) standard. Alternative fuel vehicles receive a £10 annual reduction. New rates apply from April 1 2018
New car Vehicle Excise Duty (VED) rates are shown in the table, above right. From April 1 2018, diesel cars that do not meet the Real Driving Emissions Step 2 (RDE2) standard are liable for increased first-year (or ‘showroom tax’) rates.
For cars already registered at March 31 2017, VED rates remain in the current 13-band structure until that date, and are subject to a RPI-based rise from April 1 2018 as shown in the table, right.
First-year rate: Applicable to all new cars in year one, with increased rates for diesels from April 1 2018
Standard rate (yr2 onwards): £140 – cars with CO2 emissions of 1g/km or over with a list price of £40,000 or less
Additional rate (yr2 onwards): £450 – cars with CO2 emissions of 1g/km or over with a list price over £40,0001.
VED CO2 emissions 2017/18 2018/19band (g/km) Standard rate Standard rate
A Up to 100 £0 £0 (+£0)
B 101-110 £20 £20 (+£0)
C 111-120 £30 £30 (+£0)
D 121-130 £115 £120 (+£5)
E 131-140 £135 £140 (+£5)
F 141-150 £150 £155 (+£5)
G 151-165 £190 £195 (+£5)
H 166-175 £220 £230 (+£10)
I 176-185 £240 £250 (+£10)
J 186-200 £280 £290 (+£10)
K1 201-225 £305 £315 (+£10)
L 226-255 £520 £540 (+£20)
M Over 255 £535 £555 (+£20)
1Includes cars emitting over 225g/km registered before March 23 2006. 2018/19 rates apply from April 1 2018
VED rates: cars already registered at March 31 2017
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COMPANY CAR TAX.The November 2017 Budget announced that the BIK tax charge on diesel cars rises from 3% to 4%, applicable from April 6 2018. The charge does not apply to diesels which meet Real Driving Emissions Step 2 (RDE2) standards, although currently there are no such vehicles available.
The taxable percentages of P11D price applying for 2017/18 to 2019/20 are shown above right. A new scale, which emphasises the importance of low emissions for reduced
company car tax liabilities, is also shown, scheduled for introduction in 2020/21.
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 www.dft.gov.uk/vca/fcb/index.asp
In 2020/21 new rates ranging from 2% to 14% apply to ultra-
low emitting cars with CO2 emissions of 0-50g/km, based on the number of zero emission miles they can cover.
Example: BIK tax liability in 2017/18: A BMW 116d SE Business 5dr has a P11D price of £23,465 and CO2 emissions of 94g/km, putting it in the 20% BIK band. £23,465 x 20% gives a taxable value of £4,693, equating to yearly BIK tax of £939 (£78/month) for a 20% tax payer, or £1,877 a year (£156/month) for a 40% tax payer.
Taxable percentages of P11D value and capital allowance rates 2017/18 to 2019/20 2020/21 CO2 BIK % Capital BIK % BIK % CO2 Zero BIK %emissions 2017/18 allowance % 2018/19 2019/20 emissions emissions 2020/21(g/km) (current year) 2017/18 (g/km) range1
0-50 9 (12) 100 13 (17) 16 (20) 0 All 2 (6)
1-50 Over 130 2 (6)
1-50 70-129 5 (9)
1-50 40-69 8 (12)
1-50 30-39 12 (16)
1-50 Up to 30 14 (18)
51-75 13 (16) 100 16 (20) 19 (23) 51-54 - 15 (19)
76-94 17 (20) 18 19 (23) 22 (26) 55-59 - 16 (20)
95-99 18 (21) 18 20 (24) 23 (27) 60-64 - 17 (21)
100-104 19 (22) 18 21 (25) 24 (28) 65-69 - 18 (22)
105-109 20 (23) 18 22 (26) 25 (29) 70-74 - 19 (23)
110-114 21 (24) 18 23 (27) 26 (30) 75-79 - 20 (24)
115-119 22 (25) 18 24 (28) 27 (31) 80-84 - 21 (25)
120-124 23 (26) 18 25 (29) 28 (32) 85-89 - 22 (26)
125-129 24 (27) 18 26 (30) 29 (33) 90-94 - 23 (27)
130-134 25 (28) 18/82 27 (31) 30 (34) 95-99 - 24 (28)
135-139 26 (29) 8 28 (32) 31 (35) 100-104 - 25 (29)
140-144 27 (30) 8 29 (33) 32 (36) 105-109 - 26 (30)
145-149 28 (31) 8 30 (34) 33 (37) 110-114 - 27 (31)
150-154 29 (32) 8 31 (35) 34 (37) 115-119 - 28 (32)
155-159 30 (33) 8 32 (36) 35 (37) 120-124 - 29 (33)
160-164 31 (34) 8 33 (37) 36 (37) 125-129 - 30 (34)
165-169 32 (35) 8 34 (37) 37 (37) 130-134 - 31 (35)
170-174 33 (36) 8 35 (37) 37 (37) 135-139 - 32 (36)
175-179 34 (37) 8 36 (37) 37 (37) 140-144 - 33 (37)
180-184 35 (37) 8 37 (37) 37 (37) 145-149 - 34 (37)
185-189 36 (37) 8 37 (37) 37 (37) 150-154 - 35 (37)
190-194 37 (37) 8 37 (37) 37 (37) 155-159 - 36 (37)
195+ 37 (37) 8 37 (37) 37 (37) 160+ - 37 (37)
Figures in brackets apply to diesels. Diesel hybrids and diesel cars that meet the Real Driving Emissions Step 2 (RDE2) standard are exempt from the diesel tax charge. 1 Measured in miles. 2 18% capital allowance applies to vehicles with CO2 emissions of 130g/km or less and 8% applies to vehicles with CO2 emissions of 131g/km or more. Rates applicable from April 6 in each year.
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CAPITAL ALLOWANCES & LEASE RENTAL RESTRICTION.Company cars bought outright are eligible for write-down allowances, where the capital outlay can be offset against tax.
In 2017/18, the capital allowance for cars with CO2 emissions of 76-130g/km inclusive, is set at 18% a year, while for cars with CO2 emissions of 131g/km or more, the allowance is 8% a year.
From April 2018, the main rate capital allowance threshold falls from 130g/km to 110g/km.
100% first year allowanceA 100% first-year capital allowance (FYA) applies to cars with CO2 emissions of 75g/km or less until March 31 2018. From April 1 2018, the 100% FYA threshold reduces from 75g/km to 50g/km, with the allowance applying until March 31 2021. Leasing companies cannot claim the first-year allowance.
Lease rental restrictionThe amounts payable on lease rentals are normally an allowable
expense for businesses that can be deducted against tax, with the CO2 emissions threshold set as for capital allowances at 130g/km in 2017/18. For new cars registered from April 2017 with CO2 emissions of 130g/km or less, 100% of their lease payments can be offset against corporation tax. For those with CO2 emissions of 131g/km or more, only 85% is claimable.
From April 2018, CO2 emissions thresholds fall from 130g/km to 110g/km in line with the thresholds for capital allowances.
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FUEL ALLOWANCES.The ‘free’ fuel benefitBIK tax is payable by drivers receiving employer-provided ‘free’ fuel for private mileage in a company car. To calculate the tax due on employer-provided ‘free’ fuel, the Government Fuel Benefit Charge (FBC) is used – set at £22,600 in 2017/18. From April 6 2018, the FBC rises to £23,400.
Calculating tax due on ‘free’ fuel A BMW 116d SE Business 5dr has CO2 emissions of 94g/km
giving a BIK tax percentage of 20% in 2017/18. Its combined fuel consumption is 78.5mpg. £22,600 x 20% gives a taxable value of £4,520. Multiplying by the driver’s tax rate (20% or 40% in 2017/18) gives annual tax of £4,520 x 20% = £904, or £4,520 x 40% = £1,808.
With the average price of diesel at £5.47/gal or £1.20/litre (November 2017), £904 will buy 165 gallons (750 litres) for a 20% tax payer or 330 gallons (1,500 litres) for a 40% tax payer.
Multiplying by the 116d SE Business’ combined fuel consumption figure of 78.5mpg gives 12,953 miles for a 20% tax payer, or 25,905 miles for a 40% tax payer – the minimum private mileages you need to cover to make the ‘free’ fuel 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.
Business mileage, private car
The HMRC mileage allowance payments (MAPs) for business mileage reimbursement in a private car are shown below for 2017/18.
The rates are the tax and NIC-free amounts claimable per mile by a driver using his/her own car on business.
Mileage Allowance Payment (MAP) rates 2017/18
Up to Over 10,000 miles 10,000 miles
All cars 45p 25p
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CLASS 1A NATIONAL INSURANCE CONTRIBUTIONS.Class 1A national insurance contributions are payable by the employer on the company car benefit, and employer-provided ‘free’ fuel for private use, at the rate of 13.8% in 2017/18. The rate is unchanged for 2018/19.
For the ‘free’ fuel calculation, the 2017/18 Government Fuel Benefit Charge of £22,600 applies to the car’s taxable value. From April 6 2018, the FBC rises to £23,400.
Calculating Class 1A NIC – cars A BMW 116d SE Business 5dr, with a P11D price of £23,465 (November 2017) and CO2 emissions of 94g/km, attracts a tax charge of 20% of its P11D value in 2017/18.
£23,465 x 20% gives a taxable value of £4,693. Multiplying by 13.8% derives the annual Class 1A NIC contribution due – £648.
Calculating Class 1A NIC – ‘free’ fuel Multiplying the fuel benefit charge (FBC) figure of £22,600 by the BMW 116d SE Business 5dr’s 20% tax charge gives a taxable value of £4,520. Multiplying by 13.8% derives the annual Class 1A NIC due – £624.
For further information on Class 1A NIC on car and fuel benefits, click HERE.
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GOVERNMENT PLUG-IN CAR GRANT FOR ULEVs.A plug-in car grant (PiCG) is available for ULEVs – electric or part-electric cars that emit 75g/km of CO2 or less. The grant is based on a car’s emissions of CO2 and its zero-emissions range.
The Budget announced investment of an extra £100 million in the PiCG, a new £400 million charging infrastructure fund and £40 million to assist with charging infrastructure R&D. It also confirmed that those charging their electric vehicles at work will not face a BIK tax charge.
ULEV grant categories 2017/18 Category 1: CO2 emissions of less than 50g/km and a zero-
emission range of over 70 miles receive a grant of £4,500.
Category 2: CO2 emissions of less than 50g/km and a zero-emission range of 10-69 miles receive a grant of £2,500.
Category 3: CO2 emissions of 50-75g/km and a zero-emission range of at least 20 miles receive a grant of £2,500.
A price cap is also in force: Category 2 and 3 cars with a list price of more than £60,000 are not eligible for the PiCG, but all Category 1 cars with a zero-emission range of more than 70 miles qualify for the full £4,500 grant. A further grant of up to 75% of the cost of installing a charge point at home, capped at £500 inc VAT, is also available.
For more information and a link to the Office for Low Emission Vehicles Go Ultra Low vehicle selector guide, click HERE
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