COMPANY CAR TAX. OCTOBER 2018. A GUIDE TO THE OCTOBER 2018 BUDGET FOR FLEET DECISION MAKERS. Disclaimer: The information provided in this Guide is for general information purposes only and is correct to the best of our knowledge at the time of publication (October 2018). While we have made every effort to ensure the information in this document is accurate, neither BMW (UK) Ltd nor the author can be held responsible for any actions or consequences arising from acting on, or refraining from taking any action, as a result of reading this. You should seek your own independent financial advice in relation to any taxation or accounting matters referred to in this document. The values for fuel consumption, CO 2 emissions and energy consumption shown were determined in a standardised test cycle according to the European Regulation (EC) 715/2007 in the version currently applicable and are for comparative purposes for vehicles fitted with standard wheel and tyre combinations. This allows a direct comparison between different models but may not represent the actual fuel consumption achieved in real world driving. CO 2 emissions can change if a different-sized alloy wheel is ordered with the vehicle. This may also lead to a change to the VED payable. More information is available at www.bmw.co.uk and at www.vehicle-certification-agency.gov.uk.
INTRODUCTION. The Budget on October 29 2018 coincided with significant change to the Plug-in Car Grant scheme for Ultra Low Emitting s, or ULEVs. Funding is now available only to cars with CO2 emissions of less than 50g/km and a zeroemissions range of over 70 miles, with a reduction from 4,500 to 3,500 per car for eligible vehicles. Elsewhere, BIK tax rates rise from April 6 2019, with the lowest BIK tax percentage applying to company cars increasing from 13% to 16%. For diesels, the lowest rate is set at 20%. A nominal VED rate rise applies on April 1 2019. The Chancellor also announced a consultative review of the impact of the Worldwide harmonised Light-vehicles Test Procedure (WLTP) on the Excise Duty (VED) and company car tax systems, which is due to report next Spring, and as such has not published applicable BIK tax percentages beyond 2020/21. A fuel duty freeze for the 9th year in succession is good news for fleet operators and drivers. Had the fuel duty escalator introduced by Government in 2011 continued as planned, a litre of unleaded petrol today would be around 1.70 at the pumps. This BMW Guide to Car Tax 2018/19 examines the implications of the 2018 Budget for fleet operators and company car drivers.
VED: rates for new cars. 2019/2020 CO2 First year rate First year rate Standard rate Standard rate emissions (compared for diesel vehicles (Yr2 on for cars (Yr2 on for cars (g/km) with (compared with with list price of with list price of 2018/19) 2018/19) 1 40,000 or less) over 40,000) 2 0 0 (+ 0) 0 (+ 0) 0 320 1-50 10 (+ 0) 25 (+ 0) 145 465 51-75 25 (+ 0) 110 (+ 5) 145 465 76-90 110 (+ 5) 130 (+ 5) 145 465 91-100 130 (+ 5) 150 (+ 5) 145 465 101-110 150 (+ 5) 170 (+ 5) 145 465 111-130 170 (+ 5) 210 (+ 5) 145 465 131-150 210 (+ 5) 530 (+ 15) 145 465 151-170 530 (+ 15) 855 (+ 25) 145 465 171-190 855 (+ 25) 1,280 (+ 40) 145 465 191-225 1,280 (+ 40) 1,815 (+ 55) 145 465 226-255 1,815 (+ 55) 2,135 (+ 55) 145 465 Over 255 2,135 (+ 65) 2,135 (+ 65) 145 465 1 Applies to diesel vehicles that do not meet the Real Driving Emissions Step 2 (RDE2) standard. Alternative fuel vehicles receive a 10 annual reduction. 2 All cars with a list price over 40,000 are liable for a 320 supplement for five years following the first year rate, after which the rate reverts to the standard 145 a year. For cars with zero emissions the rate reverts to 0 after five years. New rates apply from April 1 2019 VED: cars registered on or after March 1 2001, before April 1 2017. VED CO 2 emissions 2019/20 standard rate band (g/km) (increment over 2018/19) VEHICLE EXCISE DUTY. New car Excise Duty (VED) rates are shown in the table (above right). 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 31 2017, VED rates are subject to a Retail Price Index-based rise from April 1 2019 as shown in the table (right). First-year rate: Applicable to all new cars in year one, with increased rates for diesels Standard rate (yr2 onwards): 145 cars with CO 2 emissions of 1g/km or over with a list price of 40,000 or less Additional rate (yr2 onwards): 465 cars with CO 2 emissions of 1g/km or over with a list price over 40,000. A Up to 100 0 (+ 0) B 101-110 20 (+ 0) C 111-120 30 (+ 0) D 121-130 125 (+ 5) E 131-140 145 (+ 5) F 141-150 160 (+ 5) G 151-165 200 (+ 5) H 166-175 235 (+ 5) I 176-185 260 (+ 10) J 186-200 300 (+ 10) K* 201-225 325 (+ 10) L 226-255 555 (+ 15) M Over 255 570 (+ 15) Figures in brackets show comparison with 2018/19. * Includes cars emitting over 225g/km registered before March 23 2006. 2019/20 rates apply from April 1 2019
Taxable percentages of P11D value and capital allowance rates. 2018/19 to 2019/20 2020/21 COMPANY CAR TAX. car BIK tax is based on a car s emissions of CO 2, with the taxable percentages of P11D price applying for 2018/19 to 2019/20 shown in the table (right). For diesels that do not meet Real Driving Emissions Step 2 (RDE2) standards, a 4% tax charge applies. Currently there are no RDE2-compliant vehicles available. In 2020/21, a new scale with rates ranging from 2% to 14% applying to cars with CO 2 emissions of 0-50g/km, applies based on the number of zero emission miles they can cover. CO 2 emissions information is available for all BMW cars by clicking HERE or by visiting the Certification Agency website at www.vehicle-certification-agency.gov.uk Example: BIK tax liability calculation. A BMW 118i SE 5dr has a P11D price of 22,745 and CO 2 emissions of 134g/km, putting it in the 27% BIK band. 22,745 x 27% gives a taxable value of 6,141, equating to yearly BIK tax of 1,228 ( 102/month) for a 20% tax payer, or 2,456 a year ( 205/month) for a 40% tax payer. CO 2 BIK % BIK % CO2 Zero BIK % emissions 2018/19 allowance % 2019/20 emissions emissions 2020/21 (g/km) 2018/19 (g/km) range 2 0-50 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 16 (20) 18 19 (23) 51-54 - 15 (19) 76-94 19 (23) 18 22 (26) 55-59 - 16 (20) 95-99 20 (24) 18 23 (27) 60-64 - 17 (21) 100-104 21 (25) 18 24 (28) 65-69 - 18 (22) 105-109 22 (26) 18 25 (29) 70-74 - 19 (23) 110-114 23 (27) 18/8 1 26 (30) 75-79 - 20 (24) 115-119 24 (28) 8 27 (31) 80-84 - 21 (25) 120-124 25 (29) 8 28 (32) 85-89 - 22 (26) 125-129 26 (30) 8 29 (33) 90-94 - 23 (27) 130-134 27 (31) 8 30 (34) 95-99 - 24 (28) 135-139 28 (32) 8 31 (35) 100-104 - 25 (29) 140-144 29 (33) 8 32 (36) 105-109 - 26 (30) 145-149 30 (34) 8 33 (37) 110-114 - 27 (31) 150-154 31 (35) 8 34 (37) 115-119 - 28 (32) 155-159 32 (36) 8 35 (37) 120-124 - 29 (33) 160-164 33 (37) 8 36 (37) 125-129 - 30 (34) 165-169 34 (37) 8 37 (37) 130-134 - 31 (35) 170-174 35 (37) 8 37 (37) 135-139 - 32 (36) 175-179 36 (37) 8 37 (37) 140-144 - 33 (37) 180-184 37 (37) 8 37 (37) 145-149 - 34 (37) 185-189 37 (37) 8 37 (37) 150-154 - 35 (37) 190-194 37 (37) 8 37 (37) 155-159 - 36 (37) 195+ 37 (37) 8 37 (37) 160+ - 37 (37) Figures in brackets apply to diesels. Diesel hybrids and diesels that meet the Real Driving Emissions Step 2 (RDE2) standard are exempt from the diesel tax charge. 1 18% capital allowance applies to vehicles with CO 2 emissions of 110g/km or less and 8% applies to vehicles with CO 2 emissions of 111g/km or more. On April 1 2019, the 8% rate reduces to 6%. 2 Measured in miles. Rates applicable from April 6 in each year.
CAPITAL ALLOWANCES & LEASE RENTAL RESTRICTION. cars bought outright are eligible for write-down allowances, where capital outlay can be offset against tax. The allowance threshold is based on CO 2 emissions, set at 110g/km in 2018/19. For cars with CO 2 emissions of 51-110g/km, the allowance is 18% a year. For cars with CO 2 emissions of 111g/km or more, the allowance is 8% a year, reducing to 6% on April 1 2019. 100% first year capital allowance. A 100% first-year capital allowance (FYA) applies to cars with CO 2 emissions of 50g/km or less, applicable until March 31 2021, although leasing companies are excluded. The Chancellor has also extended Enhanced Allowances (ECAs) for companies investing in electric vehicle charge points until March 31 2023. Lease rental restriction. The amounts payable on lease rentals are normally an allowable expense for businesses that can be offset against tax, with the threshold set at 110g/km. New cars with CO 2 emissions of 110g/km or less are eligible for 100% of their lease payments to be offset against corporation tax. For those with CO 2 emissions of 111g/km or more, only 85% is claimable.
Business mileage, private car. The HMRC mileage allowance payments (MAPs) for business mileage reimbursement in a private car are shown below for 2018/19. The rates are the tax and NIC-free amounts claimable per mile by a driver using his/her own car on business. Mileage Allowance Payment (MAP) rates 2018/19 Up to Over 10,000 miles 10,000 miles All cars 45p 25p FUEL ALLOWANCES. The free fuel benefit. BIK tax is payable by drivers receiving employer-provided free fuel for private mileage in a company car. To calculate the tax, the Benefit Charge (FBC) is used 23,400 in 2018/19. The FBC rises in line with the Retail Price Index on April 6 2019. Calculating tax due on free fuel. A BMW 118i SE 5dr has CO 2 emissions of 134g/km giving a BIK tax percentage of 27% in 2018/19. Its combined fuel consumption is 47.9mpg. 23,400 x 27% gives a taxable value of 6,318. Multiplying by the driver s tax rate (20% or 40% in 2018/19) derives annual tax due of 6,318 x 20% = 1,264, or 6,318 x 40% = 2,527. With the average price of unleaded at 5.97/gal or 1.31/litre (October 2018), 1,264 will buy around 211 gallons (959 litres) for a 20% tax payer; for a 40% tax payer, the figure is 423 gallons (1,922 litres). Multiplying by the 118i SE s combined fuel consumption figure of 47.9mpg gives 10,106 miles for a 20% tax payer, or 20,261 miles for a 40% tax payer the minimum private mileages you need to cover to make the free fuel benefit worthwhile. If you drive fewer private miles than the calculated figures you will be better off paying for private fuel yourself as it will cost less than the tax you pay. On the other hand, if you drive more private miles, you are better off paying the tax.
CLASS 1A NATIONAL INSURANCE CONTRIBUTIONS. National Insurance Contributions (NIC) are payable by the employer on the company car benefit and employerprovided free fuel for private use, charged at the rate of 13.8% of taxable value. For the free fuel calculation in 2018/19, the Benefit Charge of 23,400 applies to the car s taxable value. The FBC rises in line with Retail Price Index on April 6 2019. Calculating NIC cars. A BMW 118i SE 5dr, with a P11D price of 22,745 (October 2018) and CO 2 emissions of 134g/km, attracts a tax charge of 27% of its P11D value in 2018/19. 22,745 x 27% gives a taxable value of 6,141. Multiplying by 13.8% derives the annual NIC contribution due 847. Calculating NIC free fuel in 2018/19. Multiplying the Benefit Charge (FBC) figure of 23,400 by the BMW 118i SE 5dr s 27% tax charge gives a taxable value of 6,318. Multiplying by 13.8% derives the annual NIC due 872. For further information on NIC on car and fuel benefits, click HERE.
GOVERNMENT PLUG-IN CAR GRANT FOR ULEVs. The Government Plug-in Car Grant (PiCG) for ultra-low emissions vehicles (ULEV electric or part-electric cars that emit 75g/km of CO 2 or less) is available only to cars with CO 2 emissions of less than 50g/km and a zero-emission range of over 70 miles. The grant rate is 3,500 per car, reduced from 4,500 which applied to previous Category 1 cars. Previous Category 2/3 cars are now ineligible for the grant. All ULEVs are eligible for the Electric Homecharge Scheme (EVHS) grant, even if they don t qualify for the PiCG. The EVHS covers up to 75% of the cost of installing a charge point at home, capped at 500 inc VAT. Enhanced Allowances (ECAs) are also available for companies investing in electric vehicle charge points, with the allowance extended until March 31 2023. Government ULEV grant availability. PiCG eligible cars: only cars with CO 2 emissions of less than 50g/km and a zero-emission range of over 70 miles receive a grant of 3,500. For more information on the PiCG grant scheme, click HERE. Visit www.gov.uk/plug-in-car-van-grants for a list of grant-eligible vehicles.