In last year's Budget the Chancellor confirmed future company car tax changes would be announced 3 years in advance and that the next major review of the taxation of Ultra-Low Emission Vehicles ("ULEVs") would occur in 2016, when capital allowances will also be reviewed. We therefore didn't expect any significant announcements in this Budget, so we thought a little context might be useful…
Company car tax
What we already knew
The appropriate percentage for cars with emissions above 75g/km will increase by 1% in April 2014. The percentage for the highest emissions band will increase to 37% in April 2015.
Concessions for ULEVs will be extended by the creation of two new tax bands from April 2015:
- 0 – 50 g/km for which the appropriate percentage will be 5%;
- and 51 – 75 g/km for which the appropriate percentage will be 7%.
The banding differentials between the three bands below 95g/km will reduce to:
- 4% in 2016/17;
- 3% in 2017/18;
- and 2% in 2018/19.
In April 2015 and April 2016 the appropriate percentage will rise by 2% per band for cars with emissions exceeding 75 g/km.
The 3% diesel supplement will be withdrawn from April 2016.
Announced in the Autumn Statement
From 6 April 2014 anti avoidance legislation will be introduced to ensure that:
- individuals pay for private use of a company car in the relevant tax year; and
- where an employee leases a car from an employer the benefit is taxed as a company car rather than earnings.
From April 2016 the appropriate percentage for cars registered before 1 January 1998 and cars without an emissions figure will be increased by 1% or 2% depending on the engine capacity.
2014 Budget announcements
In April 2017 and April 2018 the appropriate percentage will rise by 2% per band for cars with emissions exceeding 75 g/km.
Concessions for ULEVs will be further extended by delaying the reduction of the differential between bands by one year so that differentials between the 3 bands below 95g/km will be:
- 4% in 2017/18;
- 3% in 2018/19;
- and 2% in 2019/20.
Capital allowances
In April 2013 the first year allowance threshold was reduced to 95 g/km and first year allowances were withdrawn from car leasing companies.
Writing down allowances of 18% per annum are available for cars with CO2 emissions between 96 g/km and 130 g/km and 8% per annum may be claimed for cars with CO2 emissions above 130 g/km.
The first year allowance threshold will be reduced to 75g/km in April 2015 but no other changes are due to be announced until 2016.
Announced in the Autumn Statement
No announcements.
2014 Budget announcements
Enhanced capital allowances for zero emission goods vehicles will be extended until April 2018 but will only be available to businesses that do not claim the government's Plug-in Van Grant.
Van benefit charge
Announced in the Autumn Statement
From April 2014 the benefit in kind on a company van will increase to £3,090.
2014 Budget announcements
The benefit in kind on a company van will increase in April 2015 in line with RPI.
Vans with zero emissions will be taxed with effect from April 2015, but full van benefit charge will not apply until April 2020 as the charge will be phased in gradually.
Fuel benefit charge
Announced in the Autumn Statement
The car fuel benefit charge multiplier will increase to £21,700 and the van fuel benefit charge will increase to £581 from April 2014.
2014 Budget announcements
The car and van fuel benefit charge multipliers will increase in April 2015 in line with RPI.
Vans with zero emissions will be taxed with effect from April 2015, but full van benefit charge will not apply until April 2020 as the charge will be phased in gradually.
Other measures
No change to the lease rental restriction for cars with CO2 emissions exceeding 130g/km.
The government announced in the Autumn Statement that it will support the development of driverless cars and will continue to invest in ULEVs for public sector fleets.
VED rates for cars, motorcycles and vans will be increased in line with RPI from April 2014, the rates for HGVs will be reduced and restructured, and a rolling 40-year exemption will be introduced for classic cars. Additionally, from October 2014 the paper tax disc will be abolished and payment by direct debit will be introduced.