A much sign-posted freeze in fuel duty, an extension of the 2% increase in company car tax, a £200 million fund to repair the UK’s roads and a rise in VED in line with inflation.
These were some of the headlines of interest for fleet operators announced by Chancellor George Osborne in his fifth Budget speech and possibly the last before the next General Election.
In the Budget, which was, said Mr Osborne, for “the makers, the doers and the savers”, the Chancellor announced that the increase in fuel duty planned for September has now been cancelled.
Company Car Tax
He also revealed that the appropriate percentage of list price subject to tax will increase by 2% for cars emitting more than 75g/km of carbon dioxide (to a maximum of 37%) in both 2017-18 and 2018-19, in addition to the years already announced, 2015/16 and 2016/17.
In 2017-18 there will be a 4% differential between the 0-50 and 51-75 g/km bands and between the 51-75 and 76-94 g/km bands. In 2018-19, this differential will reduce to 3% .The differential will reduce further to 2 %in 2019-20 in line with the Budget 2013 announcement.
There was no change to the decision to increase Benefit-in-Kind taxation for Electric Vehicles to 5% in 2015/16, although this will be reviewed at the 2016 Budget.
The British Vehicle Rental and Leasing Association said the Chancellor had missed a major opportunity to support ultra-low emission vehicles in his Budget statement.
BVRLA Chief Executive, Gerry Keaney, commented:
“The Chancellor talked about extending support for low emission vehicles, but there was precious little evidence for that in this Budget.
“The electric vehicle market is still in the doldrums, and the current incentive regime isn’t working. The new company car tax rates announced will do nothing to encourage fleets and their drivers to take a risk on this costly and uncertain technology.”
Van Benefit Charge
From April 2014 the benefit in kind on a company van will increase to £3,090, and in line with RPI from April 2015.
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.
The Chancellor also announced that following the horrendous weather this winter, there would be a £200m fund for local authorities to tackle the potholes caused by the flooding – a move generally welcomed by motoring organisations around the country.
Vehicle Excise Duty
In his speech, the Chancellor confirmed that VED rates for cars, motorcycles and the main rates for vans will increase by RPI from 1 April 2014.
As announced in last year’s Autumn Statement, the Government is introducing legislation to reduce tax administration costs and burdens by removing the need to have a paper tax disc displayed on a vehicle windscreen as proof of purchase of the appropriate VED.
With effect from 1 October, motorists will also be able to pay their VED by direct debit annually, biannually or monthly, should they wish to do so. A 5% surcharge will apply to biannual and monthly payments.
Last April, 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 75 g/km in April 2015 but no other changes are due to be announced until 2016.
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.
Fuel Benefit Charge
The car fuel benefit charge multiplier will increase to £21,700 and the van fuel benefit charge will increase to £581 from April this year. From 6 April 2015, the Fuel Benefit Charge multiplier for both cars and vans will increase by RPI.
In other announcements of relevance to businesses:
- Annual Investment Allowance
The Government is doubling the annual investment allowance (AIA) to £500,000 from April 2014 until the end of 2015. This will particularly benefit small and medium sized firms. The increased AIA will mean that up to 4.9 million firms – 99.8% of businesses – will receive 100% up-front relief on their qualifying investment in plant and machinery.
- R&D Tax Credit
The government will raise the rate of the R&D tax credit payable to loss making small and medium sized companies from 11% to 14.5% from April 2014. Over the next five years, this increase will support £1.3 billion of investment in innovation.
- Employer provided benefits in kind: beneficial loans
As announced at Budget 2013, the threshold for the small loans exemption limit will be increased from £5,000 to £10,000 from April 2014.