Home. March 2018 COMPANY CAR TAX. MARCH 2018. A GUIDE TO THE 2018/19 BUDGET FOR FLEET DECISION MAKERS. While we have made every effort to ensure the information in this document is accurate, BMW (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 CO2 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. CO2 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.dft.gov.uk/vca. Information correct at date of publication, March 2018
INTRODUCTION. Raised BIK tax liabilities for diesel drivers and an increase in Excise Duty, with a new showroom tax for diesels, were highlights of the November 2017 Budget, and this Guide includes updates from 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 CO 2 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 electric cars and hybrids. The Budget highlights the continuing importance of choosing cars with low emissions of CO 2 the only way to reduce tax liabilities for drivers and fleet operators. The BMW Guide to Car Tax 2018/19 examines the implications for fleet operators and company car drivers.
Excise Duty: new cars from April 1 2018. 2018/19 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 2017/18) 2017/18) 1 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: for cars already registered at March 31 2017. VED CO 2 emissions 2018/19 band (g/km) standard rate VEHICLE EXCISE DUTY. New car 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 CO 2 emissions of 1g/km or over with a list price of 40,000 or less Additional rate (yr2 onwards): 450 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 121-130 120 (+ 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 brackets show comparison with 2017/18. * Includes cars emitting over 225g/km registered before March 23 2006. 2018/19 rates apply from April 1 2018
COMPANY CAR TAX. 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 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. CO 2 emissions information and a Car Tax calculator is available for all BMW cars by clicking HERE or by visiting the Certification Agency website at www.dft.gov.uk/vca/fcb/index.asp Taxable percentages of P11D value and capital allowance rates. 2018/19 to 2019/20 2020/21 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 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 CO 2 emissions of 110g/km or less and 8% applies to vehicles with CO 2 emissions of 111g/km or more. 2 Measured in miles. Rates applicable from April 6 in each year. In 2020/21 new rates ranging from 2% to 14% apply to ultralow emitting cars with CO 2 emissions of 0-50g/km, based on the number of zero emission miles they can cover. Example: BIK tax liability in 2018/19. A BMW 118i SE 5dr has a P11D price of 22,155 and CO 2 emissions of 112g/km, putting it in the 23% BIK band. 22,155 x 23% gives a taxable value of 5,096, equating to yearly BIK tax of 1,019 ( 85/month) for a 20% tax payer, or 2,038 a year ( 170/month) for a 40% tax payer.
CAPITAL ALLOWANCES & LEASE RENTAL RESTRICTION. cars bought outright are eligible for write-down allowances, where the capital outlay can be offset against tax. The allowance thresholds are based on CO 2 emissions. 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 CO 2 emissions of 51-110g/km inclusive, the allowance is set at 18% a year. For cars with CO 2 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 ultra-low CO 2 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 CO 2 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 CO 2 emissions of 110g/km or less, 100% of their lease payments can 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. 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 due on employer-provided free fuel, the Government Benefit Charge (FBC) is used. For 2018/19, the FBC is set at 23,400. Calculating tax due on free fuel. A BMW 118i SE 5dr has CO 2 emissions of 112g/km giving a BIK tax percentage of 23% in 2018/19. Its combined fuel consumption is 56.5mpg. 23,400 x 23% gives a taxable value of 5,382. Multiplying by the driver s tax rate (20% or 40% in 2018/19) derives annual tax due of 5,382 x 20% = 1,076, or 5,382 x 40% = 2,153. With the average price of unleaded at 5.55/gal or 1.22/litre (March 2018), 1,076 will buy around 193 gallons (877 litres) for a 20% tax payer; for a 40% tax payer, the figure is 387 gallons (1,759 litres). Mileage Allowance Payment (MAP) rates 2018/19 Up to Over 10,000 miles 10,000 miles All cars 45p 25p Multiplying by the 118i SE s combined fuel consumption figure of 56.5mpg gives 10,904 miles for a 20% tax payer, or 21,865 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 are payable by the employer on the company car benefit, and employerprovided free fuel for private use, is unchanged from 2017/18 at 13.8% of taxable value. For the free fuel calculation, the 2018/19 Government Benefit Charge of 23,400 applies to the car s taxable value from April 6 2018. Calculating NIC cars. A BMW 118i SE 5dr, with a P11D price of 22,155 (March 2018) and CO 2 emissions of 112g/km, attracts a tax charge of 23% of its P11D value in 2018/19. 22,155 x 23% gives a taxable value of 5,096. Multiplying by 13.8% derives the annual NIC contribution due 703. Calculating NIC free fuel. Multiplying the fuel benefit charge (FBC) figure of 23,400 by the BMW 118i SE 5dr s 23% tax charge gives a taxable value of 5,382. Multiplying by 13.8% derives the annual NIC due 743. For further information on NIC on car and fuel benefits, click HERE.
GOVERNMENT PLUG-IN CAR GRANTS FOR s. A plug-in car grant (PiCG) is available for s electric or partelectric cars that emit 75g/km of CO 2 or less. The grant is based on a car s emissions of CO 2 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 those charging their electric vehicles at work will not face a BIK tax charge. grant categories 2018/19. Category 1: CO 2 emissions of less than 50g/km and a zeroemission range of over 70 miles receive a grant of 4,500. Category 2: CO 2 emissions of less than 50g/km and a zeroemission range of 10-69 miles receive a grant of 2,500. Category 3: CO 2 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 A further grant of up to 75% of the cost of installing a charge point at home, capped at 500 inc VAT, is also available. For more information and a link to the Office for Low Emission s Go Ultra Low vehicle selector guide, click HERE