We take a look benefit in kind BIK tax and VED in this year’s budget
So, what did this
year’s Budget bring to the company car arena? Let’s take a look at what the
Chancellor of the Exchequer George Osborne delivered in his fifth budget speech
last week in part one of our special report.
Company car tax
The new company car
tax tables for benefit-in-kind tax were set out for 2017/2018 and 2018/2019. In
addition, rates that were previously announced for 2016/2017 were confirmed
along with removal of the government’s 3% diesel supplement.
There will be a 2
percent rise for cars that emit more than 75g/km CO2 (maximum will be 37%) and
now the two lowest thresholds (0-50 g/km and 51-75 g/km) have now
been increased; the differential between these rates has also been altered to
the 76-94g/km threshold.
The Chancellor wanted
to incentivise the take-up of super-low emissions vehicles and in this year’s
budget, he changed the differential between 0-50 and 51-75
g/km CO2 and 51-75 and 76-94 g/km band from three percent in
2017/18 going down to two percentage points in 2018/19 to four percent points reducing
to three points respectively.
The Chancellor also told us that the
disparity would reduce yet again to two percentage points in 2019/20.
Road Tax
From 1st April the, 2014
vehicle excise duty (car tax) rates for cars, motorcycles and vans will
increase as per the Retail Prices Index (or measure of inflation).
The Government is also freezing the
VED rates for LCVs (Euro 4 and Euro 5) in 2014/15.
For HGVs, however, it’s a different
story. As previously announced last year, from April 1 the Government will be
reducing and re-structuring road tax rates for heavy goods vehicles inside the
HGV Road User Levy scheme.
Classic cars will benefit from a 40
year road tax exemption period from April 1st, too. Where cars are
over 40 years old, they will no longer have to pay vehicle excise duty.
Controversially, the paper tax disc
will also be from October 1, 2014 and there will be the option to pay for road
tax by direct debit annually, half-yearly or monthly with a 5% surcharge for
monthly and half-yearly payments.
Revenue Increase
If George Osborne is right, the
Government stand to be around £240 million pounds better off in 2017/18 and a
massive £480 million better off in 2018/19 as a result of the increases in
company car tax.
If the government continue to persue
the low emission cars at such an aggressive pace with the next budget/s (and
they have pledged that this is what they will do), it will be interesting to
see if the company car will become a thing of the past.
If this is the case, it will also be interesting to see if these
forecasts do come true. But let’s wait and see – of course, it also depends on
what the manufacturers can throw out to keep up with the low emission demands
that will keep BIK costs down for the company car driver and at the same time,
satisfy their every-day driving needs.
Written by @MotorMistress
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