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Budget 2012 headlines
The Coalition Governments third Budget statement contained a number of
announcements impacting on the UK company car and van market. These are:
Company car tax rates for ve years
to / published
Five year benet-in-kind tax
exemption for zero carbon and ultra
low carbon emission vehicles to end
from April 2015
Removal of the 3% diesel supplement
from April 2016
Car fuel benet charge to rise from
18,800 to 20,200 in 2012/13 and
by 2% above the rate of ination in
2013/14
Van benet charge frozen at 3,000
in 2012/13
The ve year exemption for zero
carbon vans from the van benet-in-
kind charge will expire from April 2015
Van fuel benet charge frozen for
2012/13 but to rise by the rate of
ination in 2013/14
The 100% rst year capital
allowance for businesses purchasing
low emissions cars extended to
31 March, 2015
The CO2 emissions threshold below
which cars are eligible for rst year
capital allowance cut from 110g/km to
95g/km from April 2013
Leased business cars no longer
eligible for the rst year capital
allowance from April 2013
The CO2 emissions threshold for
the main rate of capital allowances
for business cars reduced from
160g/km to 130g/km from April 2013.
The threshold above which the lease
rental restriction applies also reduced
from 160g/km to 130g/km
Ination-linked increase to car and
van Vehicle Excise Duty rates from
1 April, 2012
The previously announced 3.02p
per litre fuel duty increase due on
1 August, 2012 will go ahead
No change in Class 1A National
Insurance rates
No change in tax-free Authorised
Mileage Allowance Payment rates.
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Vehicle Excise Duty (VED)
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On 1 April, 2012, VED - most standard
rates and rst year rates - increased in
line with the rate of ination.
However, standard VED rates for cars
with up to 120g/km CO2 were frozen.
Additionally, rst year rates for cars
emitting up to 130g/km remain at 0.
Elsewhere, across the 13-band system,
there were increases in standard and
rst year rates ranging from 5 for
most categories to 30 in the rst year
rate for vehicles emitting more than
255g/km.
Polo: urban 35.3/8.0 67.3/4.2; extra urban (55.4/5.1) 91.1/3.1; combined 47.9/5.9 80.7/3.5.
CO2 91 139 ( ) Automatic gures
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5
Company car tax 2012/13 to 2016/17
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The start of the 2012/13 tax year heralds the introduction of a radical shake
up in company car benet-in-kind tax with the abolition of the of the so called
QUALEC (Qualifying Low Emission Car) category.
However, as a result of eet industry requests to enable vehicle choice list
planning as a consequence of extended replacement cycles, the Government has
given advanced notice of tax levels for the nancial years up to and including
2016/17 (see table page 6-7).
Additionally, in the Budget, as well as conrming already announced tax
levels for 2012/13 and 2013/14 the Government revealed a number of othersignicant changes for 2014/15, 2015/16 and 2016/17. They are:
A further tightening of company
car tax thresholds by one percentage
point for cars emitting more than
75g/km of CO2, to a maximum of
35% in 2014/15, and by two
percentage points, to a maximum of
37% in both 2015/16 and 2016/17.
From April 2015, the current ve
year exemption for zero carbon and
ultra low carbon emission vehicles
will end. The appropriate percentage
for zero emission electric cars and
low carbon vehicles will be 13% from
April 2015 and will increase by two
percentage points to 15% in 2016/17.
From April 2016, the Government
will remove the 3% diesel supplement
dierential so that diesel cars will be
subject to the same level of tax as
other cars.
HM Revenue & Customs has calculated that the increase in newly announced
company car tax rates will on average result in an employee driving a petrol-
engined car paying an additional 70 in 2014/15, 165 in 2015/16 and
165 in 2016/17.
Meanwhile, an employee driving a diesel company car will see average
increases of 85 in 2014/15 and 190 in 2015/16, followed by a reduction
of 85 in 2016/17 when the 3% diesel supplement is removed.
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0 0 0 0 N/A N/A
5 1-75 1-75 1-75 N/A N/A
10 76-99 76-94 N/A N/A N/A
11 100-104 95-99 76-94 N/A N/A
12 105-109 100-104 95-99 N/A N/A
13 110-114 105-109 100-104 0-94 N/A
14 115-119 110-114 105-109 95-99 N/A
15 120-124 115-119 110-114 100-104 0-94
16 125-129 120-124 115-119 105-109 95-99
17 130-134 125-129 120-124 110-114 100-104
18 135-139 130-134 125-129 115-119 105-109
19 140-144 135-139 130-134 120-124 110-114
20 145-149 140-144 135-139 125-129 115-119
21 150-154 145-149 140-144 130-134 120-124
22 155-159 150-154 145-149 135-139 125-129
%of
P1
1D
Price
20
12/13
CO
2(g/km)
20
13/14
CO
2(g/km)
20
14/15
CO
2(g/km)
20
15/16
CO
2(g/km)
20
16/17
CO
2(g/km)
Up to the end of tax year 2014/15 add 3% for diesel cars up to a maximum of 35%
For tax year 2015/16 add 3% for diesel cars up to a maximum of 37%
Company car tax 2012/13 to 2016/17
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23 160-164 155-159 150-154 140-144 130-134
24 165-169 160-164 155-159 145-149 135-139
25 170-174 165-169 160-164 150-154 140-144
26 175-179 170-174 165-169 155-159 145-149
27 180-184 175-179 170-174 160-164 150-154
28 185-189 180-184 175-179 165-169 155-159
29 190-194 185-189 180-184 170-174 160-164
30 195-199 190-194 185-189 175-179 165-169
31 200-204 195-199 190-194 180-184 170-174
32 205-209 200-204 195-199 185-189 175-179
33 210-214 205-209 200-204 190-194 180-184
34 215-219 210-214 205-209 195-199 185-189
35 220+ 215+ 210+ 200-204 190-194
36 N/A N/A N/A 205-209 195-199
37 N/A N/A N/A 210+ 200+
%of
P1
1D
Price
20
12/13
CO
2(g/km)
20
13/14
CO
2(g/km)
20
14/15
CO
2(g/km)
20
15/16
CO
2(g/km)
20
16/17
CO
2(g/km)
In 2016/17 petrol and diesel cars treated equally for company car tax purposes.
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HM Treasurys previously announced reduction in the main rate of capital
allowances on plant and machinery, which includes vans and cars, came into
eect from 1 April, 2012.
Capital allowance denotes the rate at which companies can write down the cost
of buying the vehicle against their taxable prots. Vehicles are separated into
three pools.
Vehicles up to 110g/km: companies can write down the full cost against their
taxable prots in the rst year of ownership.
Vehicles emitting 111-160g/km: companies can write down 18% of the cost of
the vehicle against their taxable prots each year, on a reducing balance basis(previously 20%).
Vehicles above 160g/km: companies can write down 8% of the cost against
their taxable prots each year, on a reducing balance basis (previously 10%).
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Capital allowances and lease rental restriction
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Cars already on eet prior to the
April 2009 change to an emissions
based structure will continue to be
administered under the previous price
based system until disposal under
transition period rules.
However, the Chancellor has also
announced further changes in capitalallowances business car rules, which
will become eective in 12 months
time (2013/14).
From April 2013, the Government
will extend the 100% rst year
allowance for businesses purchasing
low emissions cars for a further two
years to 31 March, 2015.
Simultaneously the CO2 emissions
threshold below which cars are
eligible for the rst year allowance
is reduced from 110g/km to
95g/km, and leased business cars
will no longer be eligible for the rstyear allowance.
Additionally, the CO2 emissions
threshold for the main rate of capital
allowances for business cars will
reduce from 160g/km to 130g/km.
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Lease rental restriction
The rules aecting lease rental restriction - the amount of the lease rental
payments claimable against corporation tax - were reformed in line with the new
emissions-based capital allowance legislation.
In 2012/13 cars leased after 1 April, 2009, are treated in one of two ways:
Cars with emissions of 160g/km or less face no lease rental restriction, meaning
that the cost of the lease is fully deductible against taxable corporate prots.
Cars with emissions of 161g/km or more face a 15% lease rental restriction,
meaning companies can only deduct 85% of any rental payments against theirtaxable prots.
However, the threshold above which the lease rental restriction applies will
reduce from 160g/km to 130g/km from April 2013 in line with the threshold for
the main rate of capital allowances for business cars.
In relation to leases that started before 1 April, 2009, all lease rental payments
for cars costing more than 12,000 are subject to the old rules until termination
of the lease.
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Passat: urban (26.2/10.8) 54.3/5.2; extra urban (47.9/5.9) 78.5/3.6: combined (36.7/7.7)
68.9/4.1. CO2 109 (180) ( ) Automatic gures
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Volkswagens engineers are constantly
working to produce cars that oer
great performance with better fuel
economy and fewer harmful emissions.
Our BlueMotion and BlueMotion
Technology models are the most
ecient and economical within the
range.
Cars which wear the BlueMotion badge
(available in Polo, Golf, Passat andPassat Estate ranges) oer customers
the highest level of economy and
exemplary environmental credentials.
Those models feature the full
complement of Volkswagens innovative
range of energy-saving technologies,
from automatic start-stop to low
rolling resistance tyres, which work in
synergy with advanced common rail
diesel engines and gearboxes to cut
fuel consumption and reduce harmful
emissions. Other fuel-saving features
include improved aerodynamics and
battery regeneration. The combination
of these features helps to reduce the
day-to-day costs of running a eet, as
well as its environmental impact.
The breadth of BlueMotion Technology
modications varies from model
range to model range. But whatever
company car youre looking for, theres
sure to be one with a BlueMotion
Technology variant as the line-up now
includes Golf, Golf Plus, Golf Estate,
Golf Cabriolet, Scirocco, Jetta, Passat,
Passat Estate, Volkswagen CC, Eos,
Tiguan, Touran, Sharan and Touareg,
as well as the most recent addition to
the range, the up!
Featuring a Stop/Start function, battery
regeneration and a multifunction
computer which displays visual gear
change recommendations for optimum
fuel consumption, cars which display a
unique BlueMotion Technologies badge
strike a balance between reducing
eet costs and maintaining the drivers
safety and comfort.
Efciency and economy with BlueMotion
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Passat Estate: urban (25.9/10.9) 54.3/5.2; extra urban (46.3/6.1) 74.3/3.8; combined
(35.8/7.9) 65.7/4.3. CO2 113 (183) ( ) Automatic gures
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Example 1
Vehicle: Volkswagen Golf
BlueMotion TDI 5dr 1.6 105PS
P11D price: 19,390
CO2 emissions: 99g/km
2012/13 (13% BIK rate)
Cash value (P11D x BIK):
19,390 x 13% = 2,521
Employers Class 1A NIC:
2,521 x 13.8% = 348
2013/14 (14% BIK rate)
Cash value (P11D x BIK):
19,390 x 14% = 2,715
Employers Class 1A NIC:
2,715 x 13.8% = 375
2016/17 (16% BIK rate)
Cash value (P11D x BIK):
19,390 x 16% =3,102
Employers Class 1A NIC:
3,102 x 13.8% = 428
Class 1A National Insurance Contributions
Employers pay Class 1A National
Insurance Contributions (NIC) on
company cars and fuel at 13.8%.
As with company car tax, the NIC is
directly linked to the P11D value and
the CO2 emission gure of a vehicle.
As the company car tax table (page
6-7) highlights, emission thresholds
have tightened in 2012/13 and will
tighten further in future years.
The only way that employers can limit a
year-on-year increase in their NIC is to
ensure choice lists feature models with
the lowest possible emissions gure.
Sample calculations below highlight
the impact of the tax changes on NIC.
Example 2
Vehicle: Volkswagen Passat SE TDI
BlueMotion Technology 2.0 140PS
P11D price: 22,205
CO2 emissions: 119g/km
2012/13 (17% BIK rate)
Cash value (P11D x BIK):22,205 x 17% = 3,775
Employers Class 1A NIC:
3,775 x 13.8% = 521
2013/14 (18% BIK rate)
Cash value (P11D x BIK):
22,205 x 18% = 3,997
Employers Class 1A NIC:
3,997 x 13.8% = 552
2016/17 (20% BIK rate)
Cash value (P11D x BIK):
22,205 x 20% = 4,441
Employers Class 1A NIC:
4,441 x 13.8% = 613
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Mileage reimbursement rates
The HM Revenue and Customs
Authorised Mileage Allowance
Payments (AMAPs) set tax and
National Insurance exempted ratesclaimable for business mileage in a
private car.
For 2012/13 the rate of reclaim for
the rst 10,000 miles remains at 45p
per mile and 25p per mile thereafter.
In addition to claiming AMAP rates, anallowance for passengers (employees
and volunteers) at 5p per mile can also
be paid tax and National Insurance free.
If the AMAP rate paid to an employee
exceeds the approved amount for the
tax year, then:
For company directors or employees
earning 8,500 or more per year, the
excess amount should be reported
on form P11D as tax is due from
the employee
For employees earning less
than 8,500 there is no reporting
requirement
Regardless of an employeesearnings, the employer has no tax to
pay to HMRC
If the AMAP rate paid to an employee
is below the approved amount for the
tax year the employer has no reporting
requirements or tax to pay to HMRC.However, the employee will be able
to obtain tax relief (called Mileage
Allowance Relief) on the unused
balance of the approved amount.
All cars 45p 25p
Up to 10,000 miles Over 10,000 miles
AMAP rates
Golf: urban 23.9/11.8 60.1/4.7; extra urban (41.5/6.8) 83.1/3.4; combined 33.2/8.5
74.3/3.8. CO2 99 - 199 ( ) Automatic gures
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Employer-provided fuel for private mileage
Employees pay benet-in-kind tax on fuel for private use paid for by their
employer, while the company must pay Class 1A NIC on the taxable scale charge.
The charge is linked to a set gure, known as the fuel benet charge multiplier.
In 2012/13 the gure is 20,200, up from 18,800. The charge will rise by 2%above ination in 2013/14. A separate gure applies for vans (see page 15).
2012/13: Calculating your free fuel liability
To calculate benet-in-kind liability on fuel for private use, you need to know:
The combined cycle fuel consumption of your company car
The CO2 emissions in g/km and the linked benet-in-kind tax percentage
The price of fuel used
The marginal tax rate of the driver (20% or 40%)
The Governments fuel benet charge multiplier (now 20,200)
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Example 1 - the drivers view
Vehicle: Volkswagen Golf
BlueMotion TDI 5dr 1.6 105PS
CO2 emissions: 99g/km
Fuel economy: combined 74.3mpg
Benet-in-kind tax: 13% (2012/13)
Taxable value (fuel benet charge
multiplier x BIK):
20,200 x 13% = 2,626
Tax charge for a 20% taxpayer:
525 (worth 359 litres of diesel)
Breakeven is 5,883 private miles
Tax charge for a 40% taxpayer:
1,050 (worth 718 litres of diesel)
Breakeven is 11,766 private miles
Example 2 - the employers view
To calculate the cost of providing fuel
for private use employers must know:
Cost of fuel, VAT rate, VAT fuel scale
charge linked to CO2, Class 1A NIC
rate, Corporation Tax rate
Fuel cost (10,000 private miles at
1.46 pence per litre): 895.00
VAT recovery at 20%: (149.16)VAT fuel scale charge: 110.83
Class 1A NIC: 362.39
Total: 1,219.06
Corporation tax at 24%: (292.57)
Net cost to company of providing
free fuel: 926.49
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Commercial vehicles 2012/13Company light commercial vehicles used privately incur benet-in-kind tax for
the driver, based on a taxable value of 3,000 in 2012/13. All electric vans are
exempt from benet-in-kind tax until the end of the 2014/15 nancial year.
If free fuel is also provided by the employer for private mileage an additional
van fuel benet charge applies. The charge for 2012/13 is 550 but will
increase by the RPI in 2013/14.
The annual tax payable for private use of a van in 2012/13 is:
For a 20% taxpayer: 3,000 x 20% = 600
For a 40% taxpayer: 3,000 x 40% = 1,200
If fuel for private use is provided then the tax charge for 2012/13 is:
For a 20% taxpayer: 550 x 20% = 110
For a 40% taxpayer: 550 x 40% = 220
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Class 1A National Insurance - vans
Employer Class 1A National Insurance contributions for vans are calculated
on the same basis as benet-in-kind tax liabilities. The amounts payable are
calculated by multiplying the taxable values by 13.8%. The example (below)
shows the levels of contribution.
Class 1A National Insurance private use of a van (3,000 x 13.8%): 414
Class 1A National Insurance private use of fuel (550 x 13.8%): 76
Capital allowances - vans
A 100% rst year capital allowance applies on the purchase of electric vans.
Vehicle Excise Duty - vans registered on or after 1 March, 2001
Registered on/after 1 March, 2001 (not over 3,500kg revenue weight): 215
Euro 4 light goods vehicles registered between 1 March, 2003, and
31 December, 2006 (not over 3,500kg revenue weight): 135
Euro 5 light goods vehicles registered between 1 January, 2009, and
31 December, 2010 (not over 3,500kg revenue weight): 135
For more information on the Volkswagen Commercial Vehicle range visit
www.volkswagen-vans.co.uk/eet
The explanations and data set out in
this guide are for general informationonly, and though given in good faith,
are given without any warranty as to
their accuracy. Please refer to your
legal or tax adviser for individual
professional advice. All information
correct at date of publication,
April 2012.
Fuel consumption gures shown are
mpg/ltr per 100 km for the Urban,Extra-urban and Combined fuel cycles
in accordance with EU Directive 99/94.
For more information on the
Volkswagen model range or to request
a test drive, call the Fleet Business
Centre on 0800 38 989 38 or visit
www.volkswagen.co.uk/eet
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