Pre-Election budget: A mixed bag for fleets

budgetThe 2015 Budget had more than one eye on the General Election in a few weeks’ time as the Chancellor, George Osborne, announced a series of measures designed to continue the feel-good factor for voters ahead of GE-day on May 7th.

Regarding measures of interest for fleet operators, there was news of a freeze in fuel duty in September, of a 2% increase in company car tax for the next three years, and 3% thereafter, of new tax bands for ultra-low emission vehicles and of a rise in VED in line with inflation.

Fuel duty
The Chancellor confirmed that the fuel duty increase planned for September, due to be 0.54p per litre, would be cancelled, a move that was broadly welcomed.

In total, the Government says it will have eased the burden on motorists by £22.4 billion by the end of this tax year, a saving of £675 for a typical motorist, £1,400 for a small business with a van, and £21,000 for a haulier.

Company car tax
As signposted previously by the Chancellor, company car tax goes up by 2% for the coming tax year 2015/16, and by the same amount for each of the next three years for all cars emitting more than 75g/km of carbon dioxide, up to a maximum of 37%, (see table).

However, the rate will increase by a further 3% in 2019-20, the Chancellor said, adding that, in a new policy, the rate for vehicles emitting less than 75g/km CO2 (Ultra Low Emitting Vehicles) would not rise as quickly. The Budget also confirmed that two new tax bands for ULEVs come into force from April as ULEVs lose their tax free status for the first time.

Company Car Tax BIK Rates 2015-2020:


Vehicle CO2
g/km
2015-16
% BIK Rate
2016-17
% BIK Rate
2017-18
% BIK Rate
2018-19
% BIK Rate 
2019-20
% BIK Rate
Petrol Diesel All fuels All fuels All fuels All Fuels
0-50 5 8 7 9 13 16
51-75 9 12 11 13 16 19
76-94 13 16 15 17 19 22
95-99 14 17 16 18 20 23
100-104 15 18 17 19 21 24
105-109 16 19 18 20 22 25
110-114 17 20 19 21 23 26
115-119 18 21 20 22 24 27
120-124 19 22 21 23 25 28
125-129 20 23 22 24 26 29
130-134 21 24 23 25 27 30
135-139 22 25 24 26 28 31
140-144 23 26 25 27 29 32
145-149 24 27 26 28 30 33
150-154 25 28 27 29 31 34
155-159 26 29 28 30 32 35
160-164 27 30 29 31 33 36
165-169 28 31 30 32 34 37
170-174 29 32 31 33 35 37
175-179 30 33 32 34 36 37
180-184 31 34 33 35 37 37
185-189 32 35 34 36 37 37
190-194 33 36 35 37 37 37
195-199 34 37 36 37 37 37
200-204 35 37 37 37 37 37
205-209 36 37 37 37 37 37
210-214 37 37 37 37 37 37
215-219 37 37 37 37 37 37
220-224 37 37 37 37 37 37
225-229 37 37 37 37 37 37
230+ 37 37 37 37 37 37


Vehicle Excise Duty

The Budget confirmed that VED rates for cars, motorcycles and the main rates for vans will increase from 1 April 2015 in line with the RPI.

VED Bands and rates for cars registered on or after 1 March 2001:

VED
Band
CO2 emissions
(g/km)
Tax year
2015-16
Standard rate
Tax year
2015-16
First year rate
A Up to 100 £0 £0
B 101-110 £20 £0
C 111-120 £30 £0
D 121-130 £110 £0
E 131-140 £130 £130
F 141-150 £145 £145
G 151-165 £180 £180
H 166-175 £205 £295
I 176-185 £225 £350
J 186-200 £265 £490
K 201-225 £290 £640
L 226-255 £490 £870
M Over 255 £505 £1,100


Driverless cars

Driverless cars were singled out by the Chancellor for investment, with £100 million earmarked for research and development into intelligent mobility. The Treasury said that the cash will be used to focus on enhancing the development of driverless car technology and the systems required to implement and adopt the technology.

First year allowances (FYA)
The 100% FYA for businesses purchasing the lowest emission vehicles has already been extended until 31 March 2018.
Budget 2015 confirmed that from April, the CO2 emissions threshold below which cars are eligible for the 100% FYA will be reduced from 95 g/km to 75 g/km.

Car and van fuel benefit charge 2015-16
From April, the Fuel Benefit Charges, currently £21,700 for cars and £581 for vans, are due to increase by the Retail Prices Index (RPI) for both classes of vehicle.

Van benefit charge 2015-16
After setting the Van Benefit Charge at £3,090 in 2014-15, the Government will increase by  RPI from April 2016. In addition, the exemption for zero carbon vans from the van benefit charge which was due to expire, has been extended to 2020 on a tapered basis.

Budget comment
Fleet Alliance managing director, Martin Brown, commented on some of the Budget measures: “While we welcome the cancellation of the increase in fuel duty planned for September, the 2% rise to the rate of company car tax for the next three years, followed by a 3% rise thereafter, is another tax on businesses and their employees.

“With the increases in company car tax and the new tax rates for ULEVs, it is more important than ever have a fleet policy in place that is both fuel and tax efficient.

“The careful selection of models with low fuel consumption to keep fuel bills in check, and those with low carbon emissions to benefit from  lower rates of company car tax , national insurance and VED, will pay handsome dividends over the next three years,” he said.