Budget dust has settled Autumn 2017
So after a couple of weeks, time to run through the small print to determine what did the budget really say about the Government's policies for the world of fleet. Also reflect on the recently lauded industrial strategy which puts fleet at the heart of the new productivity drive, time to get up to speed. Here's our quick I hope comprehensive summary.
Key takeaways as follows :
Diesel cars hit to raise funds - £220m for a Clean Air Fund to improve the quality of air in cities and towns in the UK. So how is this being done:
As expected - Company car tax
April 2018, a new diesel supplement of 4% will be applied to cars that do not meet Real Driving Emissions (RDE) Step 2 standard, replacing the 3% supplement. This will affect both company car drivers and their employers, whose Class 1A National Insurance Contributions will rise. Unfortunately not many cars will pass this new test so in reality it's a 1% uplift in real terms.
Note it does not apply to diesel hybrids, so maybe time to consider.
Want to know more about the testing regime then follow the link here
The regulation is aimed at reducing NOx emissions in real tests - ie not able to be bypassed by clever code!!
- To comply with the requirements of RDE Step 1 a car’s real-world NOx emissions must not exceed 210% of the Euro 6 emissions standard.
- RDE Step 2 tightens this NOx conformity factor to 150% from January 2020.
A change for company car tax from 2020.
CO2 emissions has been used to calculate car tax and VED will be based on WLTP (World harmonised Light vehicle Test Procedure) with effect from April 2020. This new regime aims to test cars more accurately using real time driving. We are still waiting for more details of what this might entail and how this could affect driving but the BVRLA is busy lobbying for more clarity. BVRLA WLTP Testing
Increase to Van benefit charge
From 6 April 2018 van benefit charge will rise in line with inflation to £3,350 (from £3,230), with electric vans taxed at 40% of full charge.
Increase in Fuel benefit charge
Multipliers to rise in line with inflation 6 April 2018:
- van benefit fuel multiplier — £633 (from £610); and
- car fuel benefit multiplier — £23,400 (from £22,600).
No BIK implications for employees charging their cars (company or personal) at work from April 2018 so we can expect to see continued investment in this technology. Here at LestTalkFleet we now have a number of strategic partners to support the installation of charging points at business premises. Some business owners now see an opportunity to accelerate the move to electric and also create a new revenue stream. Interested at all then let us know.
Extended for electric vehicles for Capital allowances
First year allowances for zero-emission goods vehicles, and gas and hydrogen refuelling equipment will be extended to from March 2018 to April 2021 so the choice is yours do I buy or lease. Here at LetsTalkFleet we have an in depth model to calculate what could be best for you, using our latest vehicle pricing and depreciation models. If you would like us to run some numbers for you we'd be pleased to help.
Frozen Fuel duties
He thought about an increase but thought better of it. For eight years now no increases costing the Exchequer some £46 billion in lost opportunity. Will it last though !!
Interestingly the fuel duty escalator for Liquefied Petroleum Gas (LPG) will end and the LPG duty rate will be frozen in 2018/19 so maybe this marks a policy change, let's wait and see.
Standard Vehicle Excise Duty (VED) in line with inflation
April 2018 onwards, first-year rates for cars registered after 31 March 2017, and the standard rates for vans, motorcycles and cars registered before 1 April 2017 will rise in line with inflation.
However. VED rates for HGV's will remain the same so some good news here.
In maybe a bigger change Taxis with zero-emissions will be exempt from the VED supplement for OTR prices over £40,000.
Existing previous changes that come into effect.
Capital allowance thresholds April 2018
Buying a new electric/hybrid car then the CO₂ threshold for the 100% first year allowance for businesses that purchase low emission cars will fall from 75 g/km to just 50 g/km on 1 April 2018. The main rate for emissions threshold for the main rate of capital allowances will also fall from 130 g/km to 110 g/km.
Leasing a car through the business then beware as the lease rental restriction is linked to the capital allowances main rate threshold. As a business leasing new cars with emissions exceeding 110 g/km will suffer a 15% reduction in the tax relief available on your rentals so maybe time to think alternative provisions. Here at LetsTalkFleet we can offer a range of schemes if you are considering moving away from company cars and we can model the cost savings.
Company car tax changes from April 2018
BiK percentages all set to increase :
- The lowest BiK percentage, for cars with emissions between 0 g/km and 50 g/km will rise from 9% to 13%;
- for cars with emissions between 51 g/km and 75 g/km the BiK percentage will rise from 13% to 16%; and
- for all other cars with emissions up to 180 g/km the BiK percentage will rise by 2%; so that
- the maximum 37% will be applied to cars with emissions of 180 g/km or greater.
ULEVS (What is a ULEV) Company car tax for ULEVs from April 2020
To incentivise a move to electric the BiK percentage of 16% applied in 2019/20 will be reduced in 2020/21 as follows:
- 0 g/km – Just 2%;
- 1 – 50 g/km – 2% to 14% – depending on zero emission range. (Have a look at our sister site LetsTalkLeasing to get more information about ranges and potential CO2 implications.
New bands will be introduced for cars with CO₂ emissions exceeding 50 g/km; starting at 15% for cars with emissions up to 55 g/km, the BiK percentage will increase by 1% for each 5 g/km band, up to the maximum of 37%.
See our tax bands for more help
Company car tax rates beyond 2021 will be published next autumn in Budget 2018.
The message is clear renewing company cars in 2018 mean going for 3 years or 4 years you need to think about the changes in company car tax for ULEV's. Thinking about what this could mean for you let us look at some modelling for you, there could be big savings.
Lease accounting under IFRS 16
As announced the white paper has just been released and you have until 28/02/2018 to respond if needed. The government will then consider comments but has already confirmed that proposed lease accounting changes will not change the basis of lease taxation.
Next generation vehicles
The recently announced Industrial Strategy sets out how Britain will a) increase productivity and b) create world leading industries.
See our recent blog for more information but key elements to think about for you and your business:
a) Do the recent announcements provide new opportunities for my business?
b) Do I understand the announcements and know who to speak to?
c) Need any help considering what to do next?
If any of the answers are Yes then with our rapidly growing list of networks we can find a contact to help support you.
In summary the proposals are as follows:
World Leader in Connected and autonomous cars
Driverless cars are coming with a new regulatory framework to be deployed to get the on the roads by 2021. So is this an opportunity for your business? The Government estimates the UK driverless car industry alone could be worth £28 billion to the UK economy and employ 27,000 people.
The National Infrastructure Commission will also launch a new innovation prize to determine how future roadbuilding should adapt to support self-driving cars. Could your business be part of this? Interested at all we are looking for companies to work with our existing university and research links.
Ultra-low emission vehicles
To support the transition to zero emission vehicles, the government will:
- invest £200 million, to be matched by private investment, into a new £400 million Charging Investment Infrastructure Fund - We are looking to support how this private finance could be unlocked, if you are interested let us know?
- Electrify 25% of cars in central government department fleets by 2022 - So how will they do this? We are looking into this currently.
- Continue to provide £100 million to guarantee continuation of the Plug-In Car Grant to 2020 - With our range of charging partners we can look at this for you and your business with free audits and site assessments.
- Ensuring all new homes are built with the right cables for electric car charge points and invest £40 million for research in to charging. So any homebuilders are there charging point providers wanting to install points near you? Would be great to offer this as a USP? We can possibly help here looking at different types of installer and possible PV solutions?
Modernising our transport
A new £1.7 billion Transforming Cities Fund to support intra-city transport through improving connectivity, reducing congestion and utilising new mobility services and technology. Could your business be looking to access this fund - got some ideas where you could help, let us know?
An additional £45 million will be invested this year in a Pothole Fund to tackle around 900,000 potholes across England.
Platooning of vehicles coming soon ... rows of lorries close together this could be the future. A new National Infrastructure Commission study will look at the future of freight infrastructure specifically urban congestion, decarbonisation and potential of new technologies.
A further £160 million will be invested in new 5G infrastructure. The first project starting in 2018, will be trial and test test 5G applications and deployment on roads, leveraging the trials in the west midlands. Any ideas here then let us know.
In summary the budget was not a surprise but the recently announced industrial strategy and previous policy announcements means Fleet is going to change rapidly over the coming years. So are you waiting to see what happens? or proactivley be part of it?. Any ideas let us know, as we plan to be at the heart of a number of new consortia and networks working together to create the future solutions we need. Exciting times ahead.