Budget 2015: Company car tax rates for ultra-low emission cars will increase more slowly from 2019/20 than previously announced.
Chancellor George Osborne also announced in his 2015 Budget that rates for other cars will increase by three percentage points.
The appropriate percentage of list price subject to tax will increase by three percentage points for cars emitting more than 75 grams of carbon dioxide per kilometre (gCO2/km), to a maximum of 37%, in 2019-20.
There will be a three percentage point differential between the 0-50 and 51-75 gCO2/km bands and between the 51- 75 and 76-94 gCO2/km bands.
Currently, for rates in 2017-18 and 2018-19, as announced at Budget 2014, the appropriate percentage of list price subject to tax will increase by two percentage points for cars emitting more than 75 gCO2/km, to a maximum of 37%, in both 2017-18 and 2018-19.
In 2017-18, there will be a four percentage point differential between the 0-50 and 51-75 gCO2/ km bands and between the 51-75 and 76-94 gCO2/km bands.
In 2018-19 this differential will reduce to three percentage points.
In addition, the fuel duty increase planned for 1 September 2015 will be cancelled.
This was due to rise by 54p per litre but Osborne has announced it will remain frozen.
In his Budget statement, Osborne said the government will have eased the burden on drivers by £22.4 billion by the end of 2015/16.
This equates to a saving of £675 for a typical company car driver.
According to Osborne’s Budget document, fuel duty reductions enable organisations to retain more profit, and increase wages and consumption.
Fuel duty will have been frozen for five years, the longest freeze for more than two decades.
Osborne said: “Due to government action on fuel duty since 2011, by the end of 2015/16 the typical motorist will save £9 each time they fill their tank.”
Cancelling the planned fuel duty increase in September will be welcomed by millions of drivers on Britain’s roads, with the chancellor claiming they could save ‘£10-a-tank with the Tories.
In line with this, Hitachi Capital was interested to hear of revisions to company car taxation with the changes to personal tax allowances. Hitachi Capital will be keen to understand the full impact of this as manufacturers and the government strive to reduce emissions and improve air quality with new technology.
Today’s Budget statement clearly supports the motorist with a freeze on fuel duty, and the British car industry with further investment in future technology such as driverless vehicles.
The previous Budget was criticised for increasing BIK tax on ULEVs at a faster rate than higher emitting vehicles but today’s announcement appears to be a more positive step in the right direction. The Chancellor has today announced the decision to slow down the increase for these vehicles and increase the rates for vehicles with higher CO2.
This supports the increasing popularity of ULEVs which is largely driven by company car and salary sacrifice drivers, as they continue to be the most tax and fuel efficient choice of vehicle.
Fleet decision makers and drivers amongst our customers are showing a clear intention to continue to embrace electric vehicles and hybrids ahead of common expectations. Within a short period of time we’ve seen ULEVs make up 2% of our current fleet, and we expect this to continue to grow in the coming years.
Overall, the measures announced by the Chancellor are positive and demonstrate the Government’s commitment to building and supporting a sustainable travel and transport infrastructure that supports not just current, but future needs. We welcome the fact that company car tax on Ultra-Low Emission vehicles will increase slower than previously suggested, but are disappointed that the Chancellor has decided not to further support initiatives that encourage the uptake of greener business vehicles.
The £100 million-plus of funding for research and development into intelligent mobility will play a huge part in shaping the future of business mobility. It’s also good to see support for the use of innovative transport measures such as car clubs and car sharing initiatives, which will not only help to improve sustainability and reduce costs, but provide a flexible and convenient way to keep employees moving.
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