In Detail: Budget Changes from April 2018
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In detail: Budget changes from April 2018 The Government’s Budget Statement on March 13th 2018 confirmed the significant changes to company car tax and Vehicle Excise Duty for diesel cars, announced in the November 22nd 2017 Budget. The 3% Benefit-in-Kind diesel tax charge rises by 1% rise to 4% from April 6th 2018 for all diesel cars that do not comply with the Real Driving Emissions Step 2 (RDE2) standard. There are also increases in First Year Vehicle Excise Duty (VED) – effectively a one VED band rise – for new non RDE2-compliant diesels first registered from April 1st 2018. The impending Budget changes continue to highlight the importance of choosing cars with low CO2 emissions – the only way to reduce tax liabilities for both company car drivers and fleet decision makers. Ford Fleet offers advanced engine technologies which include a broad spectrum of low-emission petrol and diesel models designed to fill every need, from city cars through to SUVs and light commercial vehicles that provide attractive and cost-effective solutions to your fleet requirements. This Ford Fleet Budget Guide provides further reading on the main announcements made in the November 2017 Budget, with detailed guidance on the key changes applicable from April 2018. 1 In detail: Budget changes from April 2018 Fuel: how petrol, diesel and hybrid compares One of the key changes announced in the Budget was the increase in BIK tax liabilities for drivers of diesel cars from April 2018. The table below shows how fuel choice affects the BIK tax payable in 2018-19 by drivers depending on whether they choose a diesel, petrol or hybrid electric company car. The figures show that choosing the Mondeo Hybrid Electric will benefit drivers with a lower BIK tax liability than for petrol or diesel in 2018-19. Mondeo Titanium Edition Mondeo Titanium Edition Mondeo Titanium Edition 1.5T Ecoboost 160PS 5dr 2.0 TDCI 150PS 5dr 2.0 TiVCT Hybrid Electric 6sp manual 6sp PowerShift 4dr 6sp auto P11D Price £22,515 £25,430 £25,845 CO2 emissions (g/km) 136 124 92 Combined fuel consumption (mpg) 47.9 61.4 70.6 BIK tax BIK band (2018-19) 28% 29% 19% BIK tax/month 2018-19 (20%/40%) £105.07/£210.14 £122.91/£245.82 £81.84/£163.69 Total BIK tax for 2018-19 (20%/40%) £1,260.84/£2,521.68 £1,474.92/£2,949.84 £982.08/£1,964.28 Summary: Petrol Petrol represents the fuel type of choice when low capital cost is important and the fleet operates low mileages where cost of operation is less of a priority. Diesel Diesel represents the fuel type of choice when the lowest cost of operation is important and the fleet operates high mileages. Hybrid Hybrid represents the fuel type of choice when the lowest CO2 and BIK are important and the fleet operators are mindful of their ‘green’ credientials with higher levels of urban operation. 2 In detail: Budget changes from April 2018 Vehicle Excise Duty Vehicle Excise Duty (VED) rates for new cars are set out in the table below. From April 1st 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 31st 2017, VED rates remain in the previous 13-band structure (see below). The new car VED system is summarised below, comprising a first-year rate, with standard and additional rates payable from year two onwards: First-year rate Applicable to all new cars, with higher diesel rates from April 1st 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 £40,000. Cars with a list price over £40,000 (including those with zero emissions) attract a supplement of £310 on their standard rate for five years Vehicle Excise Duty: rates for new cars from April 1st 2018 2018-19 CO2 First year rate First year rate Standard rate Standard rate emissions (compared (for diesel vehicles1 (Yr2 on for (Yr2 on for (g/km) with compared with cars with list price cars with list price 2017-18) 2017-18) of £40,000 or less) of over £40,0002) 0 £0 (+£0) £0 (+£0) £0 £310 1-50 £10 (+£0) £25 (+£15) £140 £450 51-75 £25 (+£0) £105 (+£80) £140 £450 76-90 £105 (+£5) £125 (+£25) £140 £450 91-100 £125 (+£5) £145 (+£25) £140 £450 101-110 £145 (+£5) £165 (+£25) £140 £450 111-130 £165 (+£5) £205 (+£45) £140 £450 131-150 £205 (+£5) £515 (+£315) £140 £450 151-170 £515 (+£15) £830 (+£330) £140 £450 171-190 £830 (+£30) £1,240 (+£440) £140 £450 191-225 £1,240 (+£40) £1,760 (+£560) £140 £450 226-255 £1,760 (+£60) £2,070 (+£370) £140 £450 Over 255 £2,070 (+£70) £2,070 (+£70) £140 £450 1 Applies to diesel vehicles that do not meet the real driving emissions step 2 (RDE2) standard. 2 All 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. Alternative fuel vehicles receive a £10 annual reduction. New rates apply from April 1st 2018 Vehicle Excise Duty: rates for cars already registered at March 31st 2017 For cars already registered at March 31st 2017, the 2018-19 rates are shown below. VED CO2 emissions 2018-19 band (g/km) Standard rate (increment over 2017-18) A Up to 100 £0 (+£0) B 101-110 £20 (+£0) C 111-120 £30 (+£0) D 121-130 £120 (+£5) E 131-140 £140 (+£5) F 141-150 £155 (+£5) G 151-165 £195 (+£5) H 166-175 £230 (+£10) I 176-185 £250 (+£10) J 186-200 £290 (+£10) K1 201-225 £315 (+£10) L 226-255 £540 (+£20) M Over 255 £555 (+£20) 1 Includes cars emitting over 225g/km registered before March 23rd 2006. 2018-19 rates apply from April 1st 2018 3 In detail: Budget changes from April 2018 Company Car Tax Diesel tax charge rises from 3% to 4% on April 6th 2018 As announced in the November 2017 Budget, the tax charge on diesel cars rises from 3% to 4% on April 6th 2018. The charge does not apply to so-called ‘clean diesels’ which meet Real Driving Emissions Step 2 (RDE2) standards, although currently there are no such vehicles available. The taxable percentages of P11D price applicable for 2018-19 to 2019-20 are shown below (with the rates for 2017- 18 also shown for comparative purposes). The new scale which emphasises the importance of low emissions for reduced company car tax liabilities is also shown, scheduled for introduction in 2020-21. Taxable percentages of P11D value 2017-18 to 2019-20 2020-21 CO2 BIK % BIK % Capital BIK % CO2 Zero BIK % emissions 2017-18 2018-19 allowance % 2019-20 emissions emissions 2020-21 (g/km) (previous year) 2018-19 (g/km) range1 0-50 9 (12) 13 (17) 100 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) 16 (20) 18 19 (23) 51-54 - 15 (19) 76-94 17 (20) 19 (23) 18 22 (26) 55-59 - 16 (20) 95-99 18 (21) 20 (24) 18 23 (27) 60-64 - 17 (21) 100-104 19 (22) 21 (25) 18 24 (28) 65-69 - 18 (22) 105-109 20 (23) 22 (26) 18 25 (29) 70-74 - 19 (23) 110-114 21 (24) 23 (27) 18/82 26 (30) 75-79 - 20 (24) 115-119 22 (25) 24 (28) 8 27 (31) 80-84 - 21 (25) 120-124 23 (26) 25 (29) 8 28 (32) 85-89 - 22 (26) 125-129 24 (27) 26 (30) 8 29 (33) 90-94 - 23 (27) 130-134 25 (28) 27 (31) 8 30 (34) 95-99 - 24 (28) 135-139 26 (29) 28 (32) 8 31 (35) 100-104 - 25 (29) 140-144 27 (30) 29 (33) 8 32 (36) 105-109 - 26 (30) 145-149 28 (31) 30 (34) 8 33 (37) 110-114 - 27 (31) 150-154 29 (32) 31 (35) 8 34 (37) 115-119 - 28 (32) 155-159 30 (33) 32 (36) 8 35 (37) 120-124 - 29 (33) 160-164 31 (34) 33 (37) 8 36 (37) 125-129 - 30 (34) 165-169 32 (35) 34 (37) 8 37 (37) 130-134 - 31 (35) 170-174 33 (36) 35 (37) 8 37 (37) 135-139 - 32 (36) 175-179 34 (37) 36 (37) 8 37 (37) 140-144 - 33 (37) 180-184 35 (37) 37 (37) 8 37 (37) 145-149 - 34 (37) 185-189 36 (37) 37 (37) 8 37 (37) 150-154 - 35 (37) 190-194 37 (37) 37 (37) 8 37 (37) 155-159 - 36 (37) 195+ 37 (37) 37 (37) 8 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 2 Measured in miles. 18% capital allowance applies to vehicles with CO2 emissions of 110g/km or less and 8% applies to vehicles with CO2 emissions of 111g/km or more.