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 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. Rates applicable from April 6th in each year.

4 In detail: Budget changes from April 2018 Calculating company car tax

The calculation of company car tax depends on the car’s P11D price and CO2 emissions, and whether or not it is a diesel. All diesel cars registered on or after January 1st 2006 are liable to a 3% BIK tax charge, rising to 4% from April 6th 2018.

CO2 emissions figures for all Ford cars can be found atwww.ford.co.uk/shop/research/brochure-download or the Vehicle Certification Agency at www.dft.gov.uk/vca/fcb/index.asp.

Example: calculating company car tax Ford New EcoSport ST-Line 1.5 TDCi 100PS 6spd AWD

P11D price (April 2018) £20,925

CO2 emissions 107g/km BIK tax band (2018-19) 26% Taxable value £20,925 x 26% = £5,440.50 2018-19 monthly BIK tax (20%) £5,440.50 x 20% /12 = £90.68 2018-19 monthly BIK tax (40%) £5,440.50 x 40% /12 = £181.35

Capital allowances and lease rental restriction

On April 1st 2018, the main rate capital allowance threshold falls from 130g/km to 110g/km, while the 100% first-year allowance threshold reduces from 75g/km to 50g/km, applicable until March 31st 2021.

New company cars purchased outright with CO2 emissions of between 51g/km and 110g/km are eligible for an 18% annual capital allowance, while those with emissions of 111g/km or above are eligible for 8% a year. Leasing companies cannot claim the first-year allowance.

Zero-emission electric are eligible for a 100% FYA, and join all Ultra-Low Emitting Vehicles (ULEVs) with CO2 emissions of 75g/km or less, applicable until April 2021. All other vans are eligible for an 18% annual capital allowance.

Lease rental restriction The amounts payable on lease rentals are normally an allowable expense for businesses that can be offset against tax. In 2018-19, the CO2 emissions-based eligibility threshold applying to lease rental restriction is the same as the threshold for capital allowances, at 110g/km.

For 2018-19, new cars with CO2 emissions of 110g/km or less are eligible for 100% of their lease costs to be offset against tax, while for those with CO2 emissions of 111g/km or more only 85% can be offset. Class 1A NIC

For 2018-19 the percentage used for the calculation of employers’ Class 1A National Insurance Contributions (NIC) on company cars and fuel remains as for 2017-18 at 13.8%. To calculate annual Class 1A NIC due, the car’s P11D price is multiplied by the relevant BIK tax percentage and then by 13.8%. For fuel, the Government Fuel Benefit Charge is used – £23,400 from April 6th 2018.

Example: Class 1A NIC liability in 2018-19

All-New Ford Fiesta Zetec 1.0T EcoBoost 100PS 6sp 3dr

P11D price (April 2018) £15,590

CO2 emissions 97g/km BIK tax band (2018-19) 20% 2018-19 Class 1A NIC (car) £15,590 x 20% x 13.8% = £430 2018-19 Class 1A NIC (fuel) £23,400 x 20% x 13.8% = £646

5 In detail: Budget changes from April 2018 Fuel allowances

The Government fuel scale charge for calculating the tax due on employer-provided ‘free’ fuel for private use in a company car is set at £23,400 from April 6th 2018. As electricity is not a fuel, there is no fuel benefit charge. This means that if an employer allows an employee to top up their (BEV), Plug-in Hybrid Electric Vehicle (PHEV) or Electric Range Extender Vehicle (E-REV) at work, it does not qualify as a car fuel benefit charge. For other fuels, to calculate your tax liability if you receive the ‘free’ fuel benefit, you need to know:

 The car’s combined fuel consumption and BIK tax percentage  The price of fuel used  The driver’s marginal tax rate and Government fuel scale charge figure

Examples: calculating the tax you pay on ‘free’ fuel

Kuga ST-Line 2.0 TDCi 150PS FWD 6sp man 5dr Mondeo Titanium Edition 2.0 TiVCT Hybrid Electric 4dr

Combined fuel consumption 60.1mpg Combined fuel consumption 67.3mpg Fuel scale charge (2018-19) £23,400 Fuel scale charge (2018-19) £23,400

CO2 emissions 122g/km CO2 emissions 92g/km BIK tax band (2018-19) 29% BIK tax band (2018-19) 19% Annual BIK tax £23,400 x 29% x 20% = £1,357.20 Annual BIK tax £23,400 x 19% x 20% = £889.20 for 20%/40% tax payers £23,400 x 29% x 40% = £2,714.40 for 20%/40% tax payers £23,400 x 19% x 40% = £1,778.40 The average price of diesel (March 2018) is £5.64/gallon (£1.24/litre). The average price of unleaded petrol (March 2018) is £5.55/gallon £1,175.20 will pay for around 240 gallons (1,091 litres) for a 20% tax payer. (£1.22/litre). £889.20 will pay for around 160 gallons (727 litres) for a 20% For a 40% tax payer the figure is 481 gallons (2,186 litres). tax payer. For a 40% tax payer the figure is 320 gallons (1,454 litres). ‘Break-even’ mileage ‘Break-even’ mileage 20% tax payer 240 x 60.1 = 14,424 miles 20% tax payer 160 x 67.3 = 10,768 miles 40% tax payer 481 x 60.1 = 28,908 miles 40% tax payer 320 x 67.3 = 21,536 miles

Business mileage in a private car: reimbursement rates

The tax and national insurance-exempt amounts claimable under the HM Revenue & Customs Mileage Allowance Payments (MAP) rates for business mileage in a private car are shown below. Electric and hybrid cars are treated in the same way as petrol and diesel cars. If your employer reimburses you at a lower rate than the MAP rates, you can claim tax relief on the difference. Reimbursements made at a higher level than the MAPs will incur tax.

Mileage Allowance Payments (MAP) rates 2018-19

Up to Over 10,000 miles 10,000 miles All cars 45p/mile 25p/mile

6 In detail: Budget changes from April 2018 Company owned vans: BIK tax

The Benefit Charge (VBC) rate for drivers of company vans, including ‘double-cab’ pick-ups, who use their vehicles for private mileage rises from £3,230 in 2017-18 to £3,350 in 2018-19. From the same date, the VBC for fuel provided for private use also rises from £610 to £633. The figures are compared in the comparison table below

Example: annual BIK tax on company-owned vans with private use

Ford Transit Courier Trend 1.5 TDCi 75PS 2018-19 20%/40% tax payers Annual BIK tax (ex fuel) £670/£1,340 (+£24/+£48) Annual BIK tax (inc fuel) £797/£1,593 (+£29/+£57) 2018-19 rates apply from April 6th 2018 Employees using their vans to drive from home to customers, and who are not allowed other private use, do not pay BIK tax.

In 2018-19 the Van Benefit Charge rate paid on electric vans is 80% of the rate paid on conventionally fuelled vans, followed by 90% in 2019-20, with the rates equalised in 2020.

Company owned vans: Class 1A NIC

Annual Class 1A National Insurance Contributions for vans, including ‘double-cab’ pick-ups, are based on the Van Benefit Charges used for BIK tax calculations – £3,230 in 2017-18 (plus £610 if fuel is included), rising to £3,350 in 2018-19 (plus £633 if fuel is included). The amounts payable are calculated by multiplying the VBC by 13.8%.

Example: annual Class 1A NIC for vans

Ford Transit Custom Base 290 L2 H2 2.0 TDCi 105PS FWD 2018-19 Annual Class 1A NIC (ex fuel) £462 (+£16) Annual Class 1A NIC (inc fuel) £550 (+£20) 2018-19 rates apply from April 6th 2018

Company owned vans: Vehicle Excise Duty

Annual VED rates for vans in 2017-18 and 2018-19 are shown below: 2018-19 Vans registered before March 1st 2001 (up to 1,549cc) £155 (+£5) Vans registered before March 1st 2001 (over 1,549cc) £255 (+£10) Euro IV and Euro V vans registered on or after March 1st 2001 £140 (+£0) All other vans registered on or after March 1st 2001 £250 (+£10)

2018-19 rates apply from April 1st 2018

7 In detail: Budget changes from April 2018 Government grants for low-emission vehicles To incentivise the take-up of ultra-low emissions vehicles (ULEV – electric or part-electric cars that emit 75g/km of CO2 or less) a Government grant – known as the plug-in car grant or PiCG – is available for eligible vehicles, administered by the Office for Low Emission Vehicles (OLEV).

The November 2017 Budget announced investment of an extra £100 million in the Plug-in-Car Grant (PiCG), a new £400 million charging infrastructure fund, and £40 million in extra funding for research and development into charging technologies. It also confirmed that HMRC will clarify the law so that, from April 1st 2018, people who charge their electric vehicles at work will not face a benefit-in-kind charge.

The way in which ULEVs attract the Government plug-in New PHEV returns zero emissions car grant is based on their emissons of CO and their 2 zero-emission range. With an advanced hybrid drivetrain that targets a zero-emission range in excess of 31 miles, Ford’s new plug-in hybrid electric (PHEV) Transit There are six categories of low-emission vehicles, Custom van is scheduled for volume production in 2019. summarised below:

 Category 1: cars with CO2 emissions of less than 50g/km and a zero-emission range of over 70 miles benefit from a grant of £4,500.

 Category 2: cars with CO2 emissions of less than 50g/km and a zero-emission range of between 10 and 69 miles benefit from a grant of £2,500.

 Category 3: cars with CO2 emissions of 50-75g/km and a zero-emission range of at least 20 miles benefit from a grant of £2,500. Transit PHEV features the multi-award winning Ford EcoBoost 1.0-litre as a range extender, charging the on-board batteries when  Motorcycles: motorcycles with CO emissions of 2 longer trips are required between charging stops and providing operators 0g/km and a zero-emission range of at least 31 miles with outstanding efficiency and flexibility. The battery pack is a compact benefit from a grant of £1,500. liquid cooled lithium-ion design located under the load floor, where it preserves the full cargo volume offered by the standard Transit Custom van.  Mopeds: mopeds or scooters with CO2 emissions of 0g/km and a zero-emission range of at least 19 miles As detailed left, operators will benefit significantly from selecting benefit from a grant of £1,500. the new Transit Custom PHEV, as vans with CO2 emissions of under 75g/km and a zero-emission range of at least 10 miles benefit from a  Vans: vans with CO emissions of under 75g/km and 2 Government Plug-in Van Grant (PiVG) of £8,000. a zero-emission range of at least 10 miles benefit from a grant of £8,000. 20 Transit Custom PHEV vans will begin a 12-month fleet customer trial in London, where they will contribute to cleaner air targets and enhanced A price cap is also in force. Category 2 and 3 cars with a list productivity in city use. price of more than £60,000 are not eligible for the grant. There is a dispensation for Category 1 vehicles over £60,000 The London fleet trial project is supported by Transport for London, working with a zero emission range of more than 70 miles, which with a cross-section of city-based businesses, including Metropolitan Police, remain eligible for the full £4,500 grant. A further grant of that will integrate the vans into their day-to-day operations. up to 75% of the cost of installing a charge point at home, capped at £500 inc VAT, is also available. Each vehicle features geofencing technology capable of automatically Go to www.gov.uk/government/organisations/office- modifying vehicle settings based on the van’s location. This may be used, for for-low-emission-vehicles for further information. example, to ensure the hybrid system is switched to electric-only mode when a vehicle enters a low-emission zone within an inner-city area.

The explanations and data set out in this Guide are provided for general information only. Though given in good faith, the information is provided without any warranty as to its accuracy. Please refer to your legal or tax adviser for individual professional advice. All information correct at date of compilation, March 13th 2018. 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 manufacturer models but may not represent the actual fuel consumption achieved in ‘real world’ driving conditions. 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 amount payable. More information is available on the Ford website at www.ford.co.uk and at www.dft.gov.uk/vca.

8 In detail: Budget changes from April 2018