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budget 2015 – the impact on your fleet

This year’s Budget, presented by the Chancellor on Wednesday 18 March 2015, was a Budget with few changes impacting on fleet. However, the main changes arising may encourage companies to reconsider the funding of company vehicles.

There are a few changes with significant impact announced in George Osborne’s Budget, including: 

• The current Annual Investment Allowance limit of £500,000 per annum is available until 31 December 2015. After which date, the limit reverts back to £25,000 per annum. 

• Further support for motorists through the cancellation of the fuel duty increase that was planned for 1 September 2015. 

• From April 2019, there will be a significant increase between the company car tax bands with the appropriate percentage of list price subject to tax increasing by 3% for cars to a maximum of 37%.

“Given the significant increases to company car benefit in kind taxation, this Budget may encourage companies to reconsider the funding of company vehicles.” 
Volvo Car Leasing


What’s changed

Company Car Tax (CCT)
Company car tax rates from 6 April 2015 will see the
appropriate percentage of list price subject to tax reaching
a maximum of 37%.

As previously announced, from 2016 the Government will
remove the 3% diesel supplement differential so that diesel
cars will be subject to the same level of tax as petrol cars.

The Government will review incentives for Ultra Low
Emission Vehicles (ULEVs) in light of market developments
at the 2016 Budget, to inform decisions on CCT from
2020-21 onwards.

From April 2019, the appropriate percentage of list price
subject to tax will increase by 3% to a maximum of 37%.

“The changes in company car tax thresholds continue to encourage low CO2 emission company cars, which generally correspond with better fuel performance figures.
Given the significant increases to company car benefit in kind taxation rates, employers may need to reconsider their company vehicle funding options, particularly in light of the impending proposed lease accounting changes.
Volvo Car Leasing

Taxable percentage of list price
CO2 emissions (g/km) 2015/ 2016 2016/ 2017 2017/ 2018 2018/ 2019 2019/ 2020
0-50 5%* 0.07 0.09 0.13 0.16
51-75 9%* 0.11 0.13 0.16 0.19
76-94 13%* 0.15 0.17 0.19 0.22
95-99 14%* 0.16 0.18 0.2 0.23
100-104 15%* 0.17 0.19 0.21 0.24
105-109 16%* 0.18 0.2 0.22 0.25
110-114 17%* 0.19 0.21 0.23 0.26
115-119 18%* 0.2 0.22 0.24 0.27
120-124 19%* 0.21 0.23 0.25 0.28
125-129 20%* 0.22 0.24 0.26 0.29
130-134 21%* 0.23 0.25 0.27 0.3
135-139 22%* 0.24 0.26 0.28 0.31
140-144 23%* 0.25 0.27 0.29 0.32
145-149 24%* 0.26 0.28 0.3 0.33
150-154 25%* 0.27 0.29 0.31 0.34
155-159 26%* 0.28 0.3 0.32 0.35
160-164 27%* 0.29 0.31 0.33 0.36
165-169 28%* 0.3 0.32 0.34 0.37
170-174 29%* 0.31 0.33 0.35 0.37
175-179 30%* 0.32 0.34 0.36 0.37
180-184 31%* 0.33 0.35 0.37 0.37
185-189 32%* 0.34 0.36 0.37 0.37
190-194 33%* 0.35 0.37 0.37 0.37
195-199 34%* 0.36 0.37 0.37 0.37
200-204 35%** 0.37 0.37 0.37 0.37
205-209 36%*** 0.37 0.37 0.37 0.37
210 or over 0.37 0.37 0.37 0.37 0.37

Emissions figures for vehicles are rounded down. Diesel supplements: *add 3% **add 2% ***add 1%. The percentage is to be capped at 37% from 5 April 2015. The 3% diesel supplement to the percentage still applies until 5 April 2016 when it is abolished.


Fuel Duty 

Budget 2015 announced further support for motorists through the further cancellation of the fuel duty increase that was planned for 1 September 2015.

“The fuel duty freeze means that it will be the longest duty freeze in over 20 years. This is a welcome relief for companies as it helps contain costs, and equates to a saving of £675 for a typical motorist, and £1,400 for a small business with a van.
Whilst the continued freeze of the fuel duty is good news, company fuel expenditure should continue to be reviewed, to maximise fuel efficiency and encourage appropriate driver behaviour.” 
Volvo Car Leasing

Annual Investment Allowance (AIA) 

Businesses are able to claim the AIA in respect of their capital expenditure on plant and machinery excluding cars. The AIA is effectively a 100% Writing Down Allowance (WDA). The current limit of which is £500,000 per annum, for the period to 31 December 2015. This AIA can be used for the purchase of light commercial vehicles and motorcycles. The allowance is available to a single company but where there is a group of companies or there are related companies under common control, the limit of the allowance remains at £500,000. From 1 January 2016, the limit reverts back to £25,000 per annum.


VAT Fuel Scale Charge 

Where businesses recover VAT on fuel used for private motoring, the scale charges to be used from 1 May 2015 are as shown below

CO2 emissions
(g/km)
Current VAT
fuel scale charge,
12 month period
From 1 May
2014 VAT fuel
scale charge,
12 month period
120 or less 627 536
125 939 802
130 1004 857
135 1064 909
140 1129 965
145 1190 1016
150 1255 1072
155 1315 1123
160 1381 1179
165 1441 1231
170 1506 1286
175 1567 1338
180 1632 1393
185 1692 1445
190 1757 1501
195 1818 1552
200 1883 1608
205 1943 1660
210 2008 1715
215 2069 1767
220 2134 1822
225 or more 2194 1874


Vehicle Excise Duty (Ved) 

From 1 April 2015 VED (Vehicle Excise Duty) rates will increase in line with RPI (Retail Price Index). The Government will freeze the VED rates for Euro IV and V light goods vehicles in 2015/16.

VED
Band
CO2
emissions
(g/km)
2014
/2015
First Year
Rate
2014
/2015
Standard
Rate
2015
/2016
First Year
Rate
2015
/2016
Standard
Rate†
A Up to 100 0 0 0 0
B 101-110 0 20 0 20
C 111-120 0 30 0 30
D 121-130 0 110 0 110
E 131-140 130 130 130 130
F 141-150 145 145 145 145
G 151-165 180 180 180 180
H 166-175 290 205 295 205
I 176-185 345 225 350 225
J 186-200 485 265 490 265
K 201-225 635 285 640 290
L 226-255 860 485 870 490
M Over 255 1090 500 1100 505


†Alternative fuel car discount: £10 all cars.

Motorists are able to pay their VED by direct debit annually, biannually or monthly, should they wish to do so for a 5% surcharge (if biannual or monthly).

“Vehicle Excise Duty rates continue to rise, consistent with the Government’s long term aim of making higher emitting vehicles more expensive to run.
The Whole Life Cost of running your vehicles is impacted by changes to VED. We can help you to understand how your current vehicle choices will affect the costs of running your fleet in the future, and assist you in making the right decisions.” 
Volvo Car Leasing

What was previously announced

Corporation Tax 

As previously announced, from 1 April 2015, the large companies’ rate will be in line with the small companies’ rate of corporation tax which will remain at 20%.

“The UK will have the joint lowest rate of loans to employees. Corporation Tax in the G20, making it more competitive for UK businesses thereby supporting sustainable economic growth.
From a fleet perspective, from April 2015 the reduction in corporation tax will help mitigate some of the impact on the cost of lease rental restriction which will apply to new leased cars with CO2 emissions greater than 130 g/km.” 
Volvo Car Leasing

Fuel Benefit Charge (FBC) 

The fuel benefit charge multiplier for private fuel for company cars increases from £21,700 to £22,100 from 6 April 2015. There is further commitment to increase this in line with inflation. The effect of this will be that fuel for private motoring becomes even more of a ‘benefit in decline’.

“This continues to be a very expensive benefit to offer with the true financial benefit often being far less than the cost of providing it.” 
Volvo Car Leasing

Interest Free Loans 

The threshold for interest free loans provided by employers to employees is £10,000 per annum. From 6 April 2015, the official rate of interest will be 3%. The official rate of interest is used in calculating the benefit in kind charge on beneficial loans to employees.


Employer’s National Insurance (NIC) for under 21s 

From 6 April 2015, the employer NICs for under 21 year olds earning less than £815 a week will be abolished. This should have a positive impact on Employee Car Ownership Schemes (ECOS) due to lower gross up costs. However with respect to Salary Sacrifice schemes, this may erode the savings achieved by employers unless steps are put into place to address this for under 21 year old drivers


Company van taxation 

Where company vans are used for private use (other than home to work travel), the Government has increased the van benefit charge to £3,150 from 6 April 2015.


Van Fuel Benefit Charge 

From 6 April 2015, the van fuel benefit charge multiplier will be increased to £594. There is a commitment to increase this in line with inflation.


Electric vehicles 

From 6 April 2015, the Van Benefit Charge (VBC) for vans with zero CO2 emissions (electric vans) will be 20% of the rate paid by conventionally fuelled vans, followed by 40% in 2016/17, 60% in 2017/18, 80% in 2018/19 and 90% in 2019/20, with the rates equalised in 2020/21. Zero emissions means vehicles incapable of producing CO2 emissions under any conditions when driven. The Government will review VBC support for zero emission vans in light of market developments at Budget 2016.


Advisory fuel rates 

From 1 March 2015, company car advisory fuel rates are as follows:

Engine Size Petrol Diesel LPG
1,400cc Or less 11p 9p 8p
1,401 - 1,600cc 13p 9p 10p
1,601 - 2,000cc 13p 11p 10p
Over 2,000cc 20p 14p 14p


The rates are reviewed four times a year. Any changes will take effect at the beginning of calendar quarter on 1 March, 1 June, 1 September and 1 December. These will be published on the HM Revenue & Customs (HMRC) website shortly before the date of change.


Volvo Car Leasing is a trading style of Lex Autolease Ltd, Heathside Park, Heathside Park Road, Stockport SK3 0RB. Contract Hire is provided by Lex Autolease Ltd and is only available to applicants aged 18 and over and resident in mainland UK and N. Ireland. Registered Trade Marks of Volvo Car Leasing. Licensed for use by Black Horse Ltd and Lex Autolease Ltd. Copyright © 2015 Lex Autolease. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means or stored in any retrieval system without the prior written permission of Lex Autolease. Whilst every effort has been made by Lex Autolease to ensure that information given is not misleading, this material is provided only as an overview of the subject and is not a substitute for professional advice. No responsibility can be accepted by Lex Autolease for any loss nor liability occasioned by any person acting or refraining from action as a result of this Fact Sheet.