Chancellor of the Exchequer George Osborne delivered his fourth Budget speech yesterday (Wednesday, March 20, 2013).
He described his Budget, the subject of a 55-minute statement in the House of Commons, as one that ‘fixed our country’s economic problems’ and one for ‘our aspiring nation’.
Below we highlight the Chancellor’s key measures that will impact on the company car and van sector and wider motor industry.
Company car tax
The Budget papers have confirmed that previously announced changes in company car benefit-in-kind tax up to the end of 2016/17 will go ahead. However, the Chancellor responded to intensive lobbying, particularly from the Society of Motor Manufacturers and Traders, to deliver tax incentives to support demand for ultra low emission vehicles.
As a result, from April 6, 2015, two new company car tax bands will be introduced at 0-50 g/km CO2 and 51-75 g/km CO2. For full details of Company Car BIK Tax Table please see the tax table on the Ogilvie Fleet.
Last year, the Chancellor shocked the fleet and motor industries by announcing that company car benefit-in-kind tax rates on zero emission cars (electric vehicles) would leap from 0% in 2014/15 to 13% in 2015/16. Simultaneously, he announced that rates on ultra low emission models (1-75 g/km) would jump from 5% to 13%.
Now, following intensive lobbying by the Society of Motor Manufacturers and Traders, the Chancellor has performed a partial U-turn and announced new company car benefit-in-kind tax rates for zero and ultra low emission cars from April 2015 when the current five-year exemption for such models ends.
Whether that is enough to kick-start demands remains to be seen, as company car drivers at the wheel of electric cars today, or who choose them in the next two years, will see their benefit-in-kind tax bills rise from 0% to 5% in 2015/16 and 7% in 2016/17 with further rises to follow.
The 1.89p per litre (+ VAT) fuel duty increase that was planned for September 1, 2013 has been cancelled. It means that fuel duty will have been frozen for nearly three and half years, the longest duty freeze for over 20 years, according to the Government.
The Government has calculated that cancelling the duty rise amid concerted pressure from consumer and industry groups will mean it will cost the typical motorist £7 less to fill up their tank every time they visit the pump from next month, and £10 less by the end of the Parliament in 2015.
Car fuel benefit charge 2013/14
Employees who are in receipt of company-funded fuel used privately will see their benefit-in-kind tax bills rise from April 6, 2013.
The Chancellor announced in the Budget that the fuel benefit charge multiplier for company cars will increase from £20,200 in 2012/13 to £21,100 in 2013/14. From April 6, 2014, the multiplier will increase by RPI.
Van benefit charge
The Government has frozen the van benefit charge at £3,000 in 2013/14. It will increase by RPI from April 6, 2014
Van fuel benefit charge 2013/14
From April 6, the van fuel benefit charge multiplier will increase from £550 to £564. It will increase by RPI from April 6, 2014.