Chancellor George Osborne’s Budget 2014 is to take further action at building a resilient economy. The chancellor stated,’ If you’re a maker, a doer or a saver: this Budget is for you. ’ The Budget was a curate’s egg of a Statement – good in parts for fleets, but not so good in others, said David Hosking, Chief Executive Officer of Tusker, with new tax implications we don’t think it’s one to make savings.
The 2014 Budget was a curate’s egg of a Statement – good in parts for fleets, but not so good in others, said David Hosking, Chief Executive Officer of Tusker.
“While we welcome the necessary clarity that the announcement regarding the 2% increase on company car tax in 2017/18 and 2018/19 brings, we also think that the Chancellor missed a huge opportunity to encourage uptake of electric vehicles which was hugely disappointing.
“The confirmation of the new 5% BIK tax rate for EVs, rising to 13% in four years, will do nothing to encourage or stimulate the fledgling EV market where uptake is currently fragile at best.
“It was also disappointing that leasing companies were not given the opportunity to claim first year writing down allowances on ultra-low emission vehicles as had been hoped, and that there was no guidance on advisory fuel rates for EVs – and I say this as one who has just taken delivery of their first BMW i3.
“There was pre-Budget speculation that the Office of Tax Simplification’s recommendation that Class 1A NICs should be abolished in favour of Class 1 NICs on all benefits would be confirmed in the Statement.
“We are delighted that commonsense has prevailed and Government is now going to consult on this instead of blindly following the OTS’s recommendation, as this would have penalised unfairly all employees who are eligible for benefits of any kind, including company cars.
“We also welcome the cancellation of the planned rise in fuel duty which was intended for this September, and the abolition of the paper tax disc from October which will do much to remove the admin burden that many fleets face in taxing their company vehicles.”
Budget announcements at a glance
Company car tax
The appropriate percentage of list price subject to tax will increase by 2% for cars emitting more than 75g/km of carbon dioxide (to a maximum of 37%) in both 2017-18 and 2018-19, in addition to the years already announced, 2015/16 and 2016/17.
In 2017-18 there will be a 4% differential between the 0-50 and 51-75 g/km bands and between the 51-75 and 76-94 g/km bands. In 2018-19, this differential will reduce to 3%.The differential will reduce further to 2% in 2019-20 in line with the Budget 2013 announcement.
There was no change to the decision to increase Benefit-in-Kind taxation for Electric Vehicles to 5% in 2015/16, although this will be reviewed at the 2016 Budget.
Van Benefit Charge
From April 2014 the benefit in kind on a company van will increase to £3,090, and in line with RPI from April 2015.
Vans with zero emissions will be taxed with effect from April 2015, but full van benefit charge will not apply until April 2020 as the charge will be phased in gradually.
The Chancellor announced that the increase in fuel duty planned for September has now been cancelled.
Vehicle Excise Duty
The VED rates for cars, motorcycles and the main rates for vans will increase by RPI from 1 April 2014.
The Government is introducing legislation to reduce tax administration costs by removing the need to have a paper tax disc displayed on a vehicle windscreen as proof of purchase of the appropriate VED.
With effect from 1 October, motorists will also be able to pay their VED by direct debit annually, biannually or monthly, should they wish to do so. A 5% surcharge will apply to biannual and monthly payments.
The first year allowance threshold will be reduced to 75 g/km in April 2015 but no other changes are due to be announced until 2016.
Enhanced capital allowances for zero emission goods vehicles will be extended until April 2018 but will only be available to businesses that do not claim the government's Plug-in Van Grant.
Fuel Benefit Charge
The car fuel benefit charge multiplier will increase to £21,700 and the van fuel benefit charge will increase to £581 from April this year. From 6 April 2015, the Fuel Benefit Charge multiplier for both cars and vans will increase by RPI.
There will be an additional £200m fund for local authorities to tackle the potholes caused by the flooding, a move generally welcomed by motoring organisations around the country.