BVRLA Budget Summary March 2012
Transport Taxation
Company car tax rates 2014–16
From April 2014 the appropriate percentage of list price subject to tax will increase by one percentage point for cars emitting more than 75 g/km of carbon dioxide, to a maximum of 35 per cent in 2013-2014 & 2014–15, and by two percentage points, to a maximum of 37 per cent in both 2015–16 and 2016–17.
From April 2015, the five-year exemption for zero carbon and ultra-low carbon emission vehicles will come to an end as legislated in Finance Act 2010. The appropriate percentage for zero emission and low carbon vehicles will be 13 per cent from April 2015 and will increase by two percentage points in 2016–17.
From April 2016, the Government will remove the three percentage point diesel supplement differential so that diesel cars will be subject to the same level of tax as petrol cars.
The BVRLA’s fact sheet on the company car tax regime has been updated to reflect the changes and can be found here:
Company Car Taxation – Fact Sheet 511 (is currently being updated)
BVRLA Comment
The emissions based company car tax system has been a little, too successful, resulting in a larger than expected fall in tax revenues. So it is no surprise that the Chancellor is continuing to incentivise further cuts in emissions by lowering the tax thresholds. We are delighted to see that the government has responded to our calls for it to abolish the unjustified 3% diesel supplement, bringing diesel cars into parity with their petrol-engined equivalents by 2016. We also applaud the government’s decision to listen to our calls and give employers and company car drivers a clear five-year signposting of future company car tax rates, which will enable them to choose a new, lower emission vehicle – lowering their tax bill at the same time.
Capital allowances: business cars first-year allowances (FYAs)
From April 2013, the Government will extend the 100 per cent FYA for businesses purchasing low emissions cars for a further two years to 31 March 2015. The carbon dioxide emissions threshold below which cars are eligible for the FYA will also be reduced from 110 g/km to 95 g/km, and leased business cars will no longer be eligible for the FYA.
BVRLA Comment: We are disappointed to note that leasing companies cannot claim 100% FYA. We will be lobbying Treasury to ensure that this discrimination towards leasing is reversed.
Capital allowances: business cars main rate
From April 2013, the carbon dioxide emissions threshold for the main rate of capital allowances for business cars will reduce from 160 grams/kilometre to 130 grams/kilometre. The threshold above which the lease rental restriction applies will also reduce from 160 g/km to 130 g/km.
BVRLA Comment
The fleet industry coped with the introduction of the 160g/km capital allowance threshold when it was introduced in April 2009 and it will cope with these ambitious new emissions targets. However the continuing application of the Lease Rental Restriction acts as nothing more than a double emissions tax on our customers. We will be vigorously lobbying to have this unfair fleet tax removed as we did with the 3% diesel supplement for benefit-in-kind cars. The Treasury has confirmed that this change will only apply to new cars purchased after April 2013 and we will work with them on transitional arrangements.
Car fuel benefit charge (FBC) 2012–13 and 2013–14
From 6 April 2012, the FBC multiplier for cars will increase from £18,800 to £20,200, and will increase by 2 per cent above the RPI in 2013-14. The Government commits to pre-announcing the FBC multiplier one year ahead.
The BVRLA’s fact sheet on the fuel benefit charge has been updated to reflect the changes and can be found here:
Fuel Benefit Charge – Fact Sheet 534 (is currently being updated)
Van Fuel Benefit Charge (FBC) 2012–13 and 2013–14
From 6 April 2012, the van fuel benefit charge (FBC) multiplier will be frozen at £550, and will increase by the RPI in 2013–14. The Government commits to pre-announcing the FBC multiplier one year ahead.
The Government will exclude certain security enhancements from being treated as accessories for the purpose of calculating the cash equivalent of the benefit on company cars made available for private use. The changes take effect retrospectively from 6 April 2011.
Van benefit charge
The Government will freeze the van benefit charge at £3,000 in 2012–13. From April 2015, the five year exemption for zero carbon vans from the van benefit charge will expire, as legislated in Finance Act 2010.
The BVRLA’s fact sheet on the company van tax regime can be found here:
Company Van Tax – Fact Sheet 551
Vehicle excise duty (VED) rates 2012–13
From 1 April 2012, VED rates will increase in line with the RPI, apart from VED rates for Heavy Goods Vehicles which will be frozen in 2012–13.
The BVRLA’s fact sheet on the VED regime has been updated to reflect the changes and can be downloaded here:
VED Regime – Fact Sheet 520
VED reform
The Government will consider whether to reform VED over the medium term to ensure that all motorists continue to make a fair contribution to the sustainability of the public finances, and to reflect continuing improvements in vehicle fuel efficiency. In addition, the Government aims to develop a direct debit system to allow motorists to spread their VED payments. The Government will seek the views of motoring groups on these measures.
VED: tax disc display waiver
The Government will reduce tax disc postage costs by extending to fourteen days the grace period, following the payment of tax, on the non-display of a tax disc in a vehicle.
BVRLA Comment
We are disappointed to that the tax disc still needs to be displayed and we will be working with the DVLA to ensure this is reviewed.
VED: additional days on initial nil rate vehicle licences
The Government will reduce the administrative burdens on car leasing businesses by extending the date-to-end-month scheme to VED exempt licences.
Fuel Duty – No change to the fuel duty rates and the planned 3p rise will go ahead as planned this August.
Approved Mileage Allowance Payments (AMAP) – No change announced.
VAT: revalorisation of road fuel scale charges (RFSCs) – The annual adjustment to the VAT fuel scale charge rates in line with current fuel prices will take effect from 1 May 2012.
VAT Fuel Scale Charges Fact Sheet
Business Taxation
Enhanced Capital Allowances (ECAs) in Enterprise Zones
The Government will offer 100 per cent capital allowances on plant and machinery investment made in designated areas of the London Royal Docks Enterprise Zone, three Scottish Enterprise Zones in Irvine, Nigg and Dundee, and Deeside in North Wales.
Generally Accepted Accounting Practice (GAAP)
As announced on 6 December 2011, the Government will ensure that existing tax rules dealing with tax adjustments arising on a change in accounting policy continue to apply following the expected changes to UK GAAP in 2012. The legislation will apply to changes in accounting policy where accounts are prepared after 1 January 2012.
Infrastructure
As announced in the National Infrastructure Plan 2011, the Government is taking action to facilitate greater private investment in the UK’s roads. The Government will take forward many of Alan Cook’s recommendations for the roads, including developing a national roads strategy and setting a renewed focus on the level of performance expected from the Highways Agency.
The Government will also consider whether to go further and will carry out a feasibility study into new ownership and financing models for the national road network, learning lessons from the water industry, to report on progress by Autumn Statement 2012.
Access to finance
To help small businesses raise finance, the Government has launched the National Loan Guarantee Scheme (NLGS), under which the Government will provide up to £20 billion of guarantees to banks, allowing them to borrow at a cheaper rate. The benefit banks receive will be passed through in its entirety to smaller businesses. Businesses that take out an NLGS loan will receive a discount on their loan of one percentage point compared with the interest rate that they would otherwise have received from that bank outside the scheme.
BVRLA Comment: We welcome this latest government attempt to improve the supply of credit to British businesses. By extending this cheaper funding to lease arrangements, it has recognised how important a role asset finance plays in enabling companies to run and grow their business. We hope this £20billion does make it through to where it is most needed and will be urging our members to contact one of the participating banks.
Corporation Tax
| As important new steps to achieve this objective, the Government will reduce the additional rate of income tax from 50 per cent to 45 per cent from April 2013 and will reduce the main rate of corporation tax by an additional 1 per cent from April 2012. The rate will therefore fall by 2 per cent from 26 per cent to 24 per cent in April 2012, to 23 per cent in April 2013 and to 22 per cent in April 2014. These reforms will make the tax system more competitive, encourage business investment and support growth. Corporation tax rates |
| Level of profits |
Financial year 2011-12 |
Financial year 2012-13 |
Financial year 2013-14 |
| £0 – £300,000: small profits rate |
20% |
20% |
TBA |
| £300,001 – £1,500,000 |
Marginal rate |
Marginal rate |
Marginal rate |
| Marginal rate fraction |
3/200th |
1/100 |
TBA |
| £1,500,001 or more: main rate |
26% |
24% |
23% |
