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Home Budget 2016

Vehicle excise duty

VED reform from 1st April 2017

Company car tax

Capital allowances

Class 1A NIC

Fuel reimbursement

ULEV Exit

ŠKODA cOmpAny cAr tAx GUIDE2016/2017

ŠKODA Superb

Home Budget 2016

Vehicle excise duty

VED reform from 1st April 2017

Company car tax

Capital allowances

Class 1A NIC

Fuel reimbursement

ULEV Exit

BUDGEt 2016: mAIn pOInts

› Company car drivers see their BIK tax bands rise by two percentage points, starting at 7% (10% for diesels). The 3% diesel tax charge applies until April 2021, and the Government will continue to base BIK tax on CO2 in 2020/21.

› The CO2-based main rate capital allowance threshold for company car purchases falls from 130g/km to 110g/km in April 2018. The first-year 100% capital allowance threshold for low-emission cars falls from 75g/km to 50g/km from the same date, with the allowance applicable for a further three years, until April 2021.

› New Vehicle Excise Duty rates apply from 1st April 2016. The rises are in line with the retail price index, with associated increases in ‘showroom tax’ for affected cars.

› The fuel benefit charge (FBC) used for calculating the tax due on employer-provided ‘free’ fuel for private mileage in a company car, rises from £22,100 to £22,200 from 6th April 2016

› Road fuel duty is frozen in 2016/17 at 57.95p/litre for petrol and diesel, with April’s planned duty rise cancelled.

› Class 1A NIC, payable by employers on the company car benefit and ‘free’ private mileage fuel, remains at 13.8% of taxable value in 2016/17.

› The Budget announced the Government will consult on reforming lower CO2 BIK tax bands for ultra-low emission vehicles to refocus on the cleanest cars beyond 2020/21.

Main pointsThe 2016 Budget on 16th March detailed changes to capital allowances for purchased company cars, scheduled for introduction in April 2018, as well as new VED rates which pre-empt the reform planned for April 2017.

The Budget also confirmed the Government is still consulting on the structure of the CO2-based BIK tax system from 2020/21, but, in a surprise move, also announced a freeze on road fuel duty for 2016/17.

These and other measures announced in Budget 2016 are summarised here, and covered in detail on the following pages of our Company Car Tax Guide 2016/17.

Home Budget 2016

Vehicle excise duty

VED reform from 1st April 2017

Company car tax

Capital allowances

Class 1A NIC

Fuel reimbursement

ULEV Exit

VEhIclE ExcIsE DUty (VED)

2016/17 VED rates remain in the existing 13-band graduated system, rising in line with the Retail Price Index from 1st April 2016.

The new rates pre-empt the overhaul of Vehicle Excise Duty, scheduled for 1st April 2017 (see following page).

› Cars with CO2 emissions of 100g/km or less are 100% exempt from VED.

› First-year VED is zero-rated for cars with CO2 emissions of 130g/km or less.

› First-year ‘Showroom Tax’ adds between £90 and £605 to prices of cars in Band H and above.

› VED for cars in Bands A-F is unchanged from 2015/16 rates, with standard rate rises of between £5 and £20 for cars in Bands G-M.

VED bands and rates in 2016/17

VED CO2 2016/17 2016/17 2016/17band emissions First-year Standard ‘Showroom (g/km) rate rate tax’ rate

A Up to 100 £0 £0 £0

B 101-110 £0 £20 £0

C 111-120 £0 £30 £0

D 121-130 £0 £110 £0

E 131-140 £130 £130 £0

F 141-150 £145 £145 £0

G 151-165 £185 £185 £0

H 166-175 £300 £210 £90

I 176-185 £355 £230 £125

J 186-200 £500 £270 £230

K1 201-225 £650 £295 £355

L 226-255 £885 £500 £385

M Over 255 £1,120 £515 £605

1 Includes cars emitting over 225g/km registered between 1st March 2001 and 23rd March 2006.. VED rates for 2016/17 apply from 1st April 2016

Home Budget 2016

Vehicle excise duty

VED reform from 1st April 2017

Company car tax

Capital allowances

Class 1A NIC

Fuel reimbursement

ULEV Exit

VED rEfOrms frOm 1st AprIl 2017

Substantial changes to Vehicle Excise Duty come into force in April 2017. VED will still be based on CO2 emissions, but new cars registered from 1st April 2017 will be split into three rate bands as shown below:

› Zero: £0 – cars with zero CO2 emissions, ie pure electric cars

› Standard: £140 – cars with CO2 emissions of over 1g/km with a list price of £40,000 or less

› Premium: £450 – cars with CO2 emissions of over 1g/km with a list price over £40,000*

The new rates, shown right, will apply to new cars registered on or after 1st April 2017. Cars already registered at that date remain in the current system which will not change.

Variable first-year rates and a standard annual rate of £140 will apply to all new cars except those with zero emissions, which remain exempt.

New cars with a list price above £40,000, excluding Government First Registration Fee and VED, will attract a supplement of £310 on their standard rate for the first five years after registration.

VED rates for new cars from 1st April 2017

CO2 First Standard rate Premium rateemissions year (cars with (cars with(g/km) rate list price list price of £40,000 over or less) £40,000)*

0 £0 £0 £0

1-50 £10 £140 £450

51-75 £25 £140 £450

76-90 £100 £140 £450

91-100 £120 £140 £450

101-110 £140 £140 £450

110-130 £160 £140 £450

131-150 £200 £140 £450

151-170 £500 £140 £450

171-190 £800 £140 £450

191-225 £1,200 £140 £450

226-255 £1,700 £140 £450

Over 255 £2,000 £140 £450

*New cars with a list price over £40,000 are liable for a £310 supplement for five years from date of first registration. Rates apply from 1st April 2017

Home Budget 2016

Vehicle excise duty

VED reform from 1st April 2017

Company car tax

Capital allowances

Class 1A NIC

Fuel reimbursement

ULEV Exit

cOmpAny cAr tAx (cct)The tax percentages for calculating company car tax (CCT) in 2016/17 and beyond are shown in the table (right).

Calculating CCT in 2016/17To calculate company car tax in 2016/17 you need to know the car’s P11D price*, CO2 emissions, and whether or not it is a diesel.

CO2 data for all ŠKODA models is available at www.skoda.co.uk or the Vehicle Certification Agency at www.dft.gov.uk/vca.

Example: a ŠKODA Octavia Hatch SE Business 1.6 TDI 110PS has a P11D price of £19,595 and CO2 emissions of 99g/km. How much BIK tax will I pay in 2016/17?

The Octavia SE Business 1.6 TDI 110PS has a tax percentage of 19% in 2016/17, so the taxable value is £19,595 x 19% = £3,723. For a 20% tax payer, the annual amount payable is £3,723 x 20% = £744, while for a 40% tax payer, it is £3,723 x 40% = £1,489. Dividing each by 12 gives the monthly liability.

*The P11D price is the price of the car for tax purposes. It comprises the list price of the car plus any options over £100, VAT and delivery but excludes the Government First Registration Fee (GFRF) and Vehicle Excise Duty

Taxable percentages of P11D valueCO2 emissions BIK % BIK % BIK % BIK % Capital(g/km) 2016/17 2017/18 2018/19 2019/20 allowance % 2016/17

0-50 7 (10) 9 (12) 13 (16) 16 (19) 10051-75 11 (14) 13 (16) 16 (19) 19 (22) 10076-94 15 (18) 17 (20) 19 (22) 22 (25) 1895-99 16 (19) 18 (21) 20 (23) 23 (26) 18100-104 17 (20) 19 (22) 21 (24) 24 (27) 18105-109 18 (21) 20 (23) 22 (25) 25 (28) 18110-114 19 (22) 21 (24) 23 (26) 26 (29) 18115-119 20 (23) 22 (25) 24 (27) 27 (30) 18120-124 21 (24) 23 (26) 25 (28) 28 (31) 18125-129 22 (25) 24 (27) 26 (29) 29 (32) 18130-134 23 (26) 25 (28) 27 (30) 30 (33) 18/81

135-139 24 (27) 26 (29) 28 (31) 31 (34) 8140-144 25 (28) 27 (30) 29 (32) 32 (35) 8145-149 26 (29) 28 (31) 30 (33) 33 (36) 8150-154 27 (30) 29 (32) 31 (34) 34 (37) 8155-159 28 (31) 30 (33) 32 (35) 35 (37) 8160-164 29 (32) 31 (34) 33 (36) 36 (37) 8165-169 30 (33) 32 (35) 34 (37) 37 (37) 8170-174 31 (34) 33 (36) 35 (37) 37 (37) 8175-179 32 (35) 34 (37) 36 (37) 37 (37) 8180-184 33 (36) 35 (37) 37 (37) 37 (37) 8185-189 34 (37) 36 (37) 37 (37) 37 (37) 8190-194 35 (37) 37 (37) 37 (37) 37 (37) 8195-199 36 (37) 37 (37) 37 (37) 37 (37) 8200-204 37 (37) 37 (37) 37 (37) 37 (37) 8205-209 37 (37) 37 (37) 37 (37) 37 (37) 8210-214 37 (37) 37 (37) 37 (37) 37 (37) 8215-219 37 (37) 37 (37) 37 (37) 37 (37) 8220+ 37 (37) 37 (37) 37 (37) 37 (37) 8

Figures in brackets apply to diesels. Diesel hybrids are exempt from the 3% charge . 1 18% capital allowance applies to vehicles with CO2 emissions of 130g/km or less and 8% applies to vehicles with CO2 emissions of 131g/km or more.

Home Budget 2016

Vehicle excise duty

VED reform from 1st April 2017

Company car tax

Capital allowances

Class 1A NIC

Fuel reimbursement

ULEV Exit

cApItAl AllOwAncEs AnD lEAsE rEntAl rEstrIctIOn

Capital allowances The capital cost of any new car bought outright by a company can be written down against corporation tax based on the car’s emissions of CO2.

For new company cars with CO2 emissions of 76-130g/km, the annual write-down allowance is 18% a year. For cars with CO2 emissions of 131g/km or more the allowance is 8% a year.

A 100% first-year allowance (FYA) applies until 31st March 2018 for cars with CO2 emissions of 75g/km or less.

Leasing companies are exempt from claiming the first year allowance.

From April 2018, the main rate capital allowance CO2 emissions threshold falls from 130g/km to 110g/km, with the first-year 100% capital allowance threshold for low-emission cars reducing from 75g/km to 50g/km from the same date.

The 100% first-year allowance is extended for a further three years, from April 1st 2018 until March 31st 2021.

Lease rental restrictionThe amounts payable on lease rentals are an allowable expense for businesses that can be offset against tax.

In 2016/17, the CO2 emissions threshold for lease rental restriction is the same as for capital allowances at 130g/km.

In 2016/17, cars with CO2 emissions of 130g/km or less are eligible for 100% of their lease payments to be written down against tax. For cars with CO2 emissions of 131g/km or more, only 85% can be written down.

From April 2018, the CO2 emissions thresholds reduce as for capital allowances from 130g/km to 110g/km.

Home Budget 2016

Vehicle excise duty

VED reform from 1st April 2017

Company car tax

Capital allowances

Class 1A NIC

Fuel reimbursement

ULEV Exit

clAss 1A nAtIOnAl InsUrAncE cOntrIBUtIOns (nIc)

Annual Class 1A NIC is payable by employers on the company car and car fuel benefits at the rate of 13.8% of taxable value.

To calculate the annual NIC due on a company car in 2016/17, the car’s P11D value is multiplied by its BIK tax percentage. The result is then multiplied by 13.8% to give the annual NIC due.

Example: a ŠKODA Octavia Hatch SE Business 1.6 TDI 110PS with a P11D value of £19,595 has CO2 emissions of 99g/km, giving it a tax percentage of 19%. What is the Class 1A NIC liability in 2016/17?

£19,595 x 19% = £3,723. Multiplying this by 13.8% means this model is liable for Class 1A NIC of £513 in 2016/17.

Calculation of employers’ Class 1A NIC

Home Budget 2016

Vehicle excise duty

VED reform from 1st April 2017

Company car tax

Capital allowances

Class 1A NIC

Fuel reimbursement

ULEV Exit

fUEl rEImBUrsEmEnt

Employer-provided ‘free’ fuel If your employer pays for all the fuel you use in your company car – for both business and private mileage – the private element is taxable under the CO2 emissions-based rules.

The amount of tax due is calculated using the Government fuel benefit charge (FBC) figure – £22,200 from 6th April 2016.

To calculate the tax due, you need to know the car’s combined fuel consumption and BIK tax percentage, the price of fuel used and the driver’s marginal tax rate – 20% or 40% in 2016/17.

Example: a ŠKODA Octavia Hatch SE Business 1.6 TDI 110PS has combined consumption of 74.3mpg and CO2 emissions of 99g/km. How much tax will I pay for ‘free’ private fuel? › The BIK tax percentage for this model

in 2016/17 is 19%, so the taxable value is £22,200 x 19% = £4,218. For a 20% tax payer, the annual tax payable is £4,218 x 20% = £843. For a 40% tax payer, it is £4,218 x 40% = £1,687.

› Assuming the national average price for diesel of £4.64/gallon (£1.02/litre), £843 will buy around 181 gallons for a 20% tax payer. For a 40% tax payer £1,687 will buy 363 gallons. Multiplying the Octavia’s 74.3mpg combined

consumption by 181 gallons gives 13,448 – the private mileage you will need to cover to make the ‘free’ fuel benefit worthwhile. For a 40% tax payer the figure is 26,970 miles.

› If your private mileage is less than the calculated figure, paying for the fuel yourself will cost less than the tax. If your private mileage is greater than the calculated figure, you are better off paying the tax.

Business mileage in a private car: reimbursement ratesIf you drive your own car on business, you can claim Tax and National Insurance-exempt reimbursement under the HMRC Approved Mileage Allowance Payments (AMAP).

AMAP rates 2016/17 Up to Over 10,000 miles 10,000 miles

All cars 45p 25p

If your employer reimburses you at a lower rate than the AMAP rates, you can claim tax relief on the difference. Reimbursements made at a higher level than the AMAPs will incur tax.

Home Budget 2016

Vehicle excise duty

VED reform from 1st April 2017

Company car tax

Capital allowances

Class 1A NIC

Fuel reimbursement

ULEV Exit

GOVErnmEnt GrAnts fOr UltrA-lOw EmIssIOn VEhIclEsUltra-low emission vehicles (ULEVs) – electric or part-electric cars that emit 75g/km of CO2 or less – are eligible for a Government plug-in car grant, or PiCG.

The grants are administered by the Office for Low Emission Vehicles (OLEV), with the grant amounts varying according to the car’s environmental performance.

Since 1st March 2016, all ULEVs have been categorised according to their emissions of CO2 and their zero-emission range, with the maximum PiCG grant available per car set at £4,500.

The categories are summarised below:

› Category 1: cars with CO2 emissions of less than 50g/km and a zero-emissions range of over 70 miles receive a grant of £4,500.

› Category 2: cars with CO2 emissions of less than 50g/km and a zero-emissions range of between 10 and 69 miles receive a grant of £2,500.

› Category 3: cars with CO2 emissions of 50-75g/km and a zero-emissions range of at least 20 miles receive a grant of £2,500.

Cars with a list price of £60,000 or more are not eligible for the grant, except for those in Category 1.

The grant levels will be maintained until March 2017, or until 40,000 sales of Category 1 vehicles and 45,000 combined sales of Categories 2 and 3 are achieved.

The explanations and data set out in this guide are for general information only, and though given in good faith, are made without any warranty as to their accuracy and do not take into account changes after the

date of publication. Please refer to your legal or tax adviser for individual professional advice. All information correct at date of publication, March 2016. All prices shown are applicable to vehicles in standard trim,

are correct at date of publication (March 2016) and include VAT at 20%. All models shown are equipped with standard-fit transmission unless otherwise stated. All ŠKODA diesel engines are fitted with a Diesel

Particulate Filter (DPF) as standard. Fuel consumption and CO2 figures quoted for ŠKODA models are obtained under standardised EU test conditions (Directive 93/116/EEC) and are for comparative purposes for

vehicles fitted with standard wheel and tyre combinations. This allows a direct comparison between different manufacturer models but may not represent the actual fuel consumption achieved in ‘real world’

driving conditions. CO2 emissions can change if a different-sized alloy wheel is ordered with the vehicle. This may also lead to a change to the VED amount payable. More information on CO2 emissions is available at

www.skoda.co.uk/fuel-consumption-statement and at www.dft.gov.uk/vca.