MARCH 2018. A GUIDE TO THE 2018/19 BUDGET FOR FLEET DECISION MAKERS.
INTRODUCTION. Raised BIK tax liabilities for diesel drivers and an increase in Vehicle Excise Duty, with a new showroom tax for diesels, were the key points of the November 2017 Budget, and this Guide includes updates following the Budget Statement on March 13 2018. The Chancellor targeted drivers of diesel company cars with a rise in the 3% Benefit-in-Kind diesel tax charge to 4%, applicable from April 6 2018. The diesel VED showroom tax measure will add up to a 520 premium at first registration over petrol counterparts, applied to diesel models that do not comply with the Real Driving Emissions Step 2 (RDE2) standard. Currently, no RDE2-compliant cars are available. A Retail Price Index-based rise in the vehicle and vehicle fuel benefit charges and a reduction in the CO2 emissions thresholds for capital allowances also apply from April 6 2018. The measures were tempered by the Chancellor s freeze on fuel duty for 2018/19, and significant investment was also announced for the Plug-in Car Grant (PiCG) and electric charge point infrastructure for buyers and owners of electric cars and hybrids. The Budget highlights the continuing importance of choosing cars with low emissions of CO2 the only way to reduce tax liabilities for drivers and fleet operators. The MINI Guide to Company Car Tax 2018/19 examines the implications for fleet operators and company car drivers. While we have made every effort to ensure the information in this document is accurate, MINI (UK) Ltd can accept no liability for your reliance on any information contained in it. You should seek your own independent financial advice in relation to any taxation or accounting matters referred to in this document. The fuel consumption and CO 2 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 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.mini.co.uk and at www.dft.gov.uk/vca. Information correct at date of publication, March 2018
VED RATES. NEW CARS FROM APRIL 1 2018. 2018/19 CO2 FIRST YEAR RATE FIRST YEAR RATE STANDARD RATE STANDARD RATE EMISSIONS (COMPARED (FOR DIESEL S (YR2 ON FOR (YR2 ON FOR (G/KM) WITH COMPARED WITH CARS WITH LIST PRICE CARS WITH LIST PRICE 2017/18) 2017/18) 1 OF 40,000 OR LESS) OVER 40,000) 2 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. Alternative fuel vehicles receive a 10 annual reduction. 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. New rates apply from April 1 2018 VED RATES. CARS ALREADY REGISTERED AT MARCH 31 2017. New car Vehicle Excise Duty (VED) rates are shown in the table, above right. From April 1 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 31 2017, VED rates remain in the current 13-band structure until that date, and are subject to a RPI-based rise from April 1 2018 as shown in the table, right. First-year rate: Applicable to all new cars in year one, with increased rates for diesels from April 1 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 1. VED CO 2 2018/19 BAND EMISSIONS STANDARD (G/KM) RATE A Up to 100 0 (+ 0) B 101-110 20 (+ 0) C 111-120 20 (+ 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) K * 201-225 315 (+ 10) L 226-255 540 (+ 20) M Over 255 555 (+ 20) Figures in brackerts show comparison with 2017/18. *Includes cars emitting over 225g/km registered before March 23 2006. 2018/19 rates apply from April 1 2018
TAXABLE PERCENTAGES OF P11D VALUE AND ALLOWANCE RATES. CO 2 BIK % BIK % CO 2 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 diesel cars 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 CO2 emissions of 110g/km or less and 8% applies to vehicles with CO2 emissions of 111g/km or more. 2 Measured in miles. Percentages apply from April 6 in each year The November 2017 Budget announced a rise in the BIK tax charge on diesel cars from 3% to 4%, applicable from April 6 2018. The charge does not apply to diesels which meet Real Driving Emissions Step 2 (RDE2) standards, although currently there are no such vehicles available. The taxable percentages of P11D price applying for 2018/19 to 2019/20 are shown in the table above right. A new scale, which emphasises the importance of low emissions for reduced company car tax liabilities, is also shown, scheduled for introduction in 2020/21. CO2 emissions information is available for all MINI cars by clicking HERE or by visiting the Vehicle Certification Agency website at www.dft.gov.uk/vca/fcb/index.asp In 2020/21 new rates ranging from 2% to 14% apply to ultra-low emitting cars with CO2 emissions of 0-50g/km, based on the number of zero emission miles they can cover. Example: BIK tax liability in 2018/19. A new MINI Cooper Hatch 1.5 136hp 5dr has a P11D price of 16,615 and CO2 emissions of 109g/km, putting it in the 22% BIK tax band in 2018/19. 16,615 x 22% gives a taxable value of 3,655, equating to yearly BIK tax of 731 ( 61/month) for a 20% tax payer, or 1,462 a year ( 108/month) for a 40% tax payer.
ALLOWANCES & LEASE RENTAL RESTRICTION. Company cars bought outright are eligible for write-down allowances, where the capital outlay can be offset against tax. The allowance thresholds are based on the car's emissions of CO2. From April 1 2018, the main rate capital allowance threshold falls from the 2017/18 level of 130g/km to 110g/km, meaning that for cars with CO2 emissions of 51-110g/km inclusive, the allowance is set at 18% a year. For cars with CO2 emissions of 111g/km or more, the allowance is 8% a year. 100% first year allowance. A 100% first-year capital allowance (FYA) applies to cars with ultralow CO2 emissions. From April 1 2018, the 100% FYA threshold is set at 50g/km, reduced from 75g/km in 2017/18, with the allowance applying until March 31 2021. Leasing companies are excluded from claiming the first-year allowance. Lease rental restriction. The amounts payable on lease rentals are normally an allowable expense for businesses that can be offset against tax. From April 1 2018, the applicable CO2 emissions threshold reduces in line with the thresholds for capital allowances, from 130g/km to 110g/km. For new cars registered from April 1 2018 with CO2 emissions of 110g/km or less, 100% of their lease payments can be offset against corporation tax. For those with CO2 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. HMRC MILEAGE ALLOWANCE PAYMENT (MAP) RATES 2018/19. UP TO OVER 10,000 MILES 10,000 MILES All cars 45p 25p 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 due on employer-provided free fuel, the Government Fuel Benefit Charge (FBC) is used, set at 23,400 in 2018/19. Calculating tax due on free fuel. A MINI Cooper Hatch 1.5 136hp 5dr has CO2 emissions of 109g/km giving a BIK tax percentage of 22% in 2018/19. Its combined fuel consumption is 60.1mpg. 23,400 x 22% gives a taxable value of 5,148. Multiplying by the driver s marginal tax rate (20% or 40% in 2018/19) gives annual liabilities of 5,148 x 20% = 1,030, or 5,148 x 40% = 2,059. With the average price of unleaded at 5.55/gal or 1.22/litre (March 2018), 1,030 will buy around 185 gallons (841 litres) for a 20% tax payer; for a 40% tax payer, the figure is 370 gallons (1,682 litres). Multiplying by the MINI s combined fuel consumption figure of 60.1mpg gives 11,118 miles for a 20% tax payer, or 22,237 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. On the other hand, if you drive more private miles than the calculated figures you are better off paying the tax.
NATIONAL INSURANCE CONTRIBUTIONS. Class 1A national insurance contributions are payable by the employer on the company car benefit, and employer-provided free fuel for private use, at the rate of 13.8% of taxable value in 2018/19. For the free fuel calculation, the 2018/19 Government Fuel Benefit Charge of 23,400 applies to the car s taxable value from April 6 2018. Calculating Class 1A NIC cars. A MINI Cooper Hatch 1.5 136hp 5dr, with a P11D price of 16,615 (March 2018) and CO2 emissions of 109g/km, attracts a tax charge of 22% of its P11D value in 2018/19. 16,615 x 22% gives a taxable value of 3,655. Multiplying by 13.8% derives the annual Class 1A NIC contribution due 504. Calculating Class 1A NIC free fuel. Multiplying the fuel benefit charge (FBC) figure of 23,400 by the MINI Cooper Hatch 1.5 136hp 5dr s 22% tax charge gives a taxable value of 5,148 in 2018/19. Multiplying by 13.8% derives the annual Class 1A NIC due 710. For further information on Class 1A NIC on car and fuel benefits, click HERE.
GOVERNMENT PLUG-IN CAR GRANT FOR s. The Government plug-in car grant (PiCG) is available for s electric or part-electric cars that emit 75g/km of CO2 or less. The grant is based on a car s emissions of CO2 and its zero-emissions range. The Budget announced investment of an extra 100 million in the PiCG, a new 400 million charging infrastructure fund and 40 million to assist with charging infrastructure R&D. It also confirmed that, from April 1 2018, those charging their electric vehicles at work will not face a BIK tax charge. grant categories 2018/19. Category 1: cars with CO2 emissions of less than 50g/km and a zero-emission range of over 70 miles receive a grant of 4,500. Category 2: cars with CO2 emissions of less than 50g/km and a zero-emission range of 10-69 miles receive a grant of 2,500. Category 3: cars with CO2 emissions of 50-75g/km and a zeroemission range of at least 20 miles receive a grant of 2,500. A price cap is also in force: Category 2 and 3 cars with a list price of more than 60,000 are not eligible for the PiCG, but all Category 1 cars with a zero-emission range of more than 70 miles qualify for the full 4,500 grant. A further grant of up to 75% of the cost of installing a charge point at home, capped at 500 including VAT, is also available. For more information and a link to the Office for Low Emission Vehicles Go Ultra Low vehicle selector guide, click HERE.