FIMTRAC Budget Report - 2015
Budget Report 2015
Budget Report 2015 FIMTRAC Budget Report - 2015 This document is intended as a guide to the main announcements in the Chancellors Budgets of 2015 th th th (18 March, 8 July & 25 November 2015) that affect the Motor and Motor Finance Industry. It should be noted that the information is correct at time of press but may be subject to future government changes and Finance Bill approval.
To view budget documents
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/4797 49/52229_Blue_Book_PU1865_Web_Accessible.pdf https://www.gov.uk/government/publications/tax-and-tax-credit-rates-andthresholds-for-2016-17/tax-and-tax-credit-rates-and-thresholds-for-201617#contents
Business Taxation Income Tax Rates and Thresholds (Individuals & Sole Traders / Partners) Rate Personal Allowance 0% Base Rate 20% Higher Rate 40% Additional Rate 45%
2015 - 2016
2016 - 2017
2017-2018
First £10,600
First £11,000
First £11,200
£10,600 - £42,385 (next £31,785)
£11,000 - £ 43,000 (next £32,000)
£11,200 - £43,600 (next £32,400)
£42,386
£43,001
£43,601
Over £150,000
Over £150,000
Over £150,000
Notes: the Personal Allowance for Additional Rate tax payers is applicable to the first £100,000 income only; it is reduced by £1 for every £2 above the limit. The government has committed to raise the personal allowance to £12,500 and the higher rate tax threshold to £50,000 by the end of the parliament Self-Assessed Tax Returns The government will publish its plans to transform the tax system to a digital basis in the near future and will consult on the details in 2016. Most businesses and the self-employed will be required to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account – reducing errors and speeding up returns and payment. This will not apply to employed persons or pensioners unless they have a secondary income of more than £10,000 pa. Corporation Tax Rates (Limited Companies) Standard Rate - UK
2015-17
2017-19
2020-21
20%
19%
18%
The Northern Ireland Assembly has indicated that they wish to pursue the implementation of a 12.5% Corporation Tax rate in NI in April 2018. National Insurance The government announced its intention to abolish Class 2 NICs for the self-employed in the next Parliament and reform Class 4 NICs to introduce a new benefit test – further details to be announced VAT 2015 – 2016 The taxable turnover threshold, which determines whether a business must be registered for VAT, is increased to £82,000 from 1 April 2015. The taxable turnover threshold for VAT de-registration is increased from £79,000 to £80,000.
2
FIMTRAC Budget Report - 2015
Budget Report 2015
Tax Allowances Tax Allowances: Capital Allowances for Cars (Purchased) 2015 – 2016 CO2 Emission (g/km)
Annual Allowance
Up to 75 g/km
100% (First Year Allowance)
76 – 130 g/km
18% (Main Rate)
Over 130 g/km
8% (Special Rate)
Notes: The 100% FYA is extended until 31 March 2018 and will be reviewed in the 2016 Budget. The main rate threshold will remain at 130g/km and will be reviewed in the 2016 Budget with any amendments taking effect from April 2018. Tax Allowances: Revenue Allowances for Cars (Leased) 2015 – 2016 CO2 Emission (g/km)
Allowable Rental
Up to 130 g/km
100%
Over 130 g/km
85%
Notes: The allowance threshold will remain at 130g/km and will be reviewed in the 2016 Budget with any amendments taking effect from April 2018. Tax Allowances: Capital Allowances for Commercial Vehicle (Purchased) 2014 – 2019
Annual Investment Allowance
The Annual Investment Allowance (AIA) allows a business to claim tax relief on allowable capital expenditure of Plant and Machinery during each of its tax years (subject to transitional rules) within the period (excludes cars).
April 2014 – December 2015
£500,000 pa
January 2016 – end of Parliament
£200,000 pa
Capital Allowance 18%
Any capital expenditure by a business in excess of the AIA limit during their financial year is dealt with in the main pool and written down at the main rate of 18% on a reducing balance basis.
Zero Emission Goods Vehicles
The chancellor has confirmed an extension of the scheme that allows businesses 100% first-year tax relief on zero emission goods vehicles (until 31 March 2018)
Tax Allowances: Revenue Allowances for Commercial Vehicle (Leased) 2015 – 2016 Commercial vehicle lease rentals are fully allowable. The rentals paid must be claimed in the year they are incurred, or they are lost. Tax Avoidance – Capital Allowances and Leasing With effect from 25 November 2015, the government will amend legislation to counter two types of avoidance involving capital allowances and leasing. These changes will prevent companies from artificially lowering the disposal value of `plant and machinery` for capital allowances purposes and make any payment received for agreeing to take responsibility for tax deductible lease related payments subject to tax as income.
3
Budget Report 2015
FIMTRAC Budget Report - 2015 Company Vehicle Tax Benefit in Kind The threshold of £8,500 for Benefit in Kind has been abolished Company Car Benefit in Kind 2014 – 2019
The proposed removal of the 3% surcharge for diesel cars from 2016 has been scrapped and the surcharge will still apply until 2021. Legislation will be introduced with effect from 2019-20 to increase the appropriate percentage of the list price of company cars by 3% for cars emitting more than 75g CO2. AMAP Rates 2015–2016 (cars and vans) Up to 10,000 business miles
0.45p per mile
Over 10,000 business miles
0.25p per mile
Car Fuel Benefit in Kind 2015 – 2017 The benefit in kind charge on free or subsidised fuel for private use is calculated using the appropriate percentage used in calculating car benefit and applying it to a set figure (The car fuel benefit multiplier) Car Fuel Benefit Multiplier
2015 - 16
£ 22,100
2016 – 17
£ 22,200
Company Van Benefit in Kind 2015 – 2017 Zero emission vans will attract a BIK charge of 20% of the standard van BIK. (This charge will increase in subsequent years to 40% in 2016, 60% in 2017, 80% in 2018, 90% in 2019 and from 2020 there will be a single charge applying to all vans).
Tax Year
Van BIK
Fuel BIK
2015 - 16
£ 3,150
£ 594
2016 - 17
£ 3,170
£ 598
Company Vehicle Benefit in Kind: National Insurance Contributions 2015 – 2016 For employers the class 1A rate remains at 13.8%. Fuel Duty The planned fuel duty increase (based on RPI and estimated to be .54p per litre) has been cancelled. Impact: By the end of the tax year 2015-16, this measure is estimated to save the typical motorist £675, a small business with a van £1,400 and a haulier £21,000. (HMRC Budget 2015). Note: There was no announcement in the Autumn Statement as to whether or not the ongoing RPI increase will be reinstated in 2016-17. Salary Sacrifice The government remains concerned about the growth of salary sacrifice and is considering what action, if any, is necessary. The government will gather further evidence, including from employers, to inform its approach going forward.
4
Budget Report 2015 FIMTRAC Budget Report - 2015 Vehicle Excise Duty (VED) https://www.gov.uk/government/publications/vehicle-excise-duty/vehicle-excise-duty Rates for cars and vans will increase in line with RPI and for cars will be reformed from April 2017 to make it fairer for motorists and reflect improvements in new car CO2 emissions Rates for HGV (VED and Road User Levy) will be frozen for 1 year.
VED bands and rates for cars first registered on or after 01 April 2017 CO2 emissions (g/km)
First year rate
Standard rate
Premium Rate
0
£0
£0
1-50
£10
£140
51-75
£25
£140
Cars with a list price of above £40,000 will attract £310 per year surcharge for the first five years in which the standard rate is paid.
76-90
£100
£140
91-100
£120
£140
101-110
£140
£140
110 -130
£160
£140
131-150
£200
£140
151-170
£500
£140
171-190
£800
£140
191-225
£1200
£140
226-255
£1700
£140
Over 255
£2000
£140
MOT The government will explore the options for requiring motorists with new cars to undergo the first MOT after 4 years rather than 3 Motor Insurance (From 01 November 2015) The Insurance Premium Tax (IPT) will be increased from 6% to 9.5% and the FCA will review what can be done to ensure people are encouraged to shop around when insurances are renewed. Despite the IPT increase, the government expects motor insurance to the consumer to be reduced by a crackdown on motor insurance fraud and the claims culture that exists. Motor Insurers are expected to pass on an average saving of £40 to £50 per policy to the consumer.
5
Budget Report 2015 FIMTRAC Budget Report - 2015 Company Car Benefit in Kind Scale Charge Calculator CO2
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
0-50
0%
5%
7%
9%
13%
16%
51-75
5%
9%
11%
13%
16%
19%
76-94
11%
13%
15%
17%
19%
22%
95-99
12%
14%
16%
18%
20%
23%
100-104
13%
15%
17%
19%
21%
24%
105-109
14%
16%
18%
20%
22%
25%
110-114
15%
17%
19%
21%
23%
26%
115-119
16%
18%
20%
22%
24%
27%
120-124
17%
19%
21%
23%
25%
28%
125-129
18%
20%
22%
24%
26%
29%
130-134
19%
21%
23%
25%
27%
30%
135-139
20%
22%
24%
26%
28%
31%
140-144
21%
23%
25%
27%
29%
32%
145-149
22%
24%
26%
28%
30%
33%
150-154
23%
25%
27%
29%
31%
34%
155-159
24%
26%
28%
30%
32%
35%
160-164
25%
27%
29%
31%
33%
36%
165-169
26%
28%
30%
32%
34%
37%
170-174
27%
29%
31%
33%
35%
37%
175-179
28%
30%
32%
34%
36%
37%
180-184
29%
31%
33%
35%
37%
37%
185-189
30%
32%
34%
36%
37%
37%
190-194
31%
33%
35%
37%
37%
37%
195-199
32%
34%
36%
37%
37%
37%
200-204
33%
35%
37%
37%
37%
37%
205-209
34%
36%
37%
37%
37%
37%
210-214
35%
37%
37%
37%
37%
37%
215-219
35%
37%
37%
37%
37%
37%
220 +
35%
37%
37%
37%
37%
37%
Note: Percentages are based on Petrol Cars. Until 2021 there is a 3% surcharge for Diesel Cars (Max 35% / 37%)
6
Budget Report 2015 FIMTRAC Budget Report - 2015 This document is intended as a guide to the main announcements in the Chancellors Budgets of 2015 th th th (18 March, 8 July & 25 November 2015) that affect the Motor and Motor Finance Industry. It should be noted that the information is correct at time of press but may be subject to future government changes and Finance Bill approval.
To view budget documents
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/4797 49/52229_Blue_Book_PU1865_Web_Accessible.pdf https://www.gov.uk/government/publications/tax-and-tax-credit-rates-andthresholds-for-2016-17/tax-and-tax-credit-rates-and-thresholds-for-201617#contents
Business Taxation Income Tax Rates and Thresholds (Individuals & Sole Traders / Partners) Rate Personal Allowance 0% Base Rate 20% Higher Rate 40% Additional Rate 45%
2015 - 2016
2016 - 2017
2017-2018
First £10,600
First £11,000
First £11,200
£10,600 - £42,385 (next £31,785)
£11,000 - £ 43,000 (next £32,000)
£11,200 - £43,600 (next £32,400)
£42,386
£43,001
£43,601
Over £150,000
Over £150,000
Over £150,000
Notes: the Personal Allowance for Additional Rate tax payers is applicable to the first £100,000 income only; it is reduced by £1 for every £2 above the limit. The government has committed to raise the personal allowance to £12,500 and the higher rate tax threshold to £50,000 by the end of the parliament Self-Assessed Tax Returns The government will publish its plans to transform the tax system to a digital basis in the near future and will consult on the details in 2016. Most businesses and the self-employed will be required to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account – reducing errors and speeding up returns and payment. This will not apply to employed persons or pensioners unless they have a secondary income of more than £10,000 pa. Corporation Tax Rates (Limited Companies) Standard Rate - UK
2015-17
2017-19
2020-21
20%
19%
18%
The Northern Ireland Assembly has indicated that they wish to pursue the implementation of a 12.5% Corporation Tax rate in NI in April 2018. National Insurance The government announced its intention to abolish Class 2 NICs for the self-employed in the next Parliament and reform Class 4 NICs to introduce a new benefit test – further details to be announced VAT 2015 – 2016 The taxable turnover threshold, which determines whether a business must be registered for VAT, is increased to £82,000 from 1 April 2015. The taxable turnover threshold for VAT de-registration is increased from £79,000 to £80,000.
2
FIMTRAC Budget Report - 2015
Budget Report 2015
Tax Allowances Tax Allowances: Capital Allowances for Cars (Purchased) 2015 – 2016 CO2 Emission (g/km)
Annual Allowance
Up to 75 g/km
100% (First Year Allowance)
76 – 130 g/km
18% (Main Rate)
Over 130 g/km
8% (Special Rate)
Notes: The 100% FYA is extended until 31 March 2018 and will be reviewed in the 2016 Budget. The main rate threshold will remain at 130g/km and will be reviewed in the 2016 Budget with any amendments taking effect from April 2018. Tax Allowances: Revenue Allowances for Cars (Leased) 2015 – 2016 CO2 Emission (g/km)
Allowable Rental
Up to 130 g/km
100%
Over 130 g/km
85%
Notes: The allowance threshold will remain at 130g/km and will be reviewed in the 2016 Budget with any amendments taking effect from April 2018. Tax Allowances: Capital Allowances for Commercial Vehicle (Purchased) 2014 – 2019
Annual Investment Allowance
The Annual Investment Allowance (AIA) allows a business to claim tax relief on allowable capital expenditure of Plant and Machinery during each of its tax years (subject to transitional rules) within the period (excludes cars).
April 2014 – December 2015
£500,000 pa
January 2016 – end of Parliament
£200,000 pa
Capital Allowance 18%
Any capital expenditure by a business in excess of the AIA limit during their financial year is dealt with in the main pool and written down at the main rate of 18% on a reducing balance basis.
Zero Emission Goods Vehicles
The chancellor has confirmed an extension of the scheme that allows businesses 100% first-year tax relief on zero emission goods vehicles (until 31 March 2018)
Tax Allowances: Revenue Allowances for Commercial Vehicle (Leased) 2015 – 2016 Commercial vehicle lease rentals are fully allowable. The rentals paid must be claimed in the year they are incurred, or they are lost. Tax Avoidance – Capital Allowances and Leasing With effect from 25 November 2015, the government will amend legislation to counter two types of avoidance involving capital allowances and leasing. These changes will prevent companies from artificially lowering the disposal value of `plant and machinery` for capital allowances purposes and make any payment received for agreeing to take responsibility for tax deductible lease related payments subject to tax as income.
3
Budget Report 2015
FIMTRAC Budget Report - 2015 Company Vehicle Tax Benefit in Kind The threshold of £8,500 for Benefit in Kind has been abolished Company Car Benefit in Kind 2014 – 2019
The proposed removal of the 3% surcharge for diesel cars from 2016 has been scrapped and the surcharge will still apply until 2021. Legislation will be introduced with effect from 2019-20 to increase the appropriate percentage of the list price of company cars by 3% for cars emitting more than 75g CO2. AMAP Rates 2015–2016 (cars and vans) Up to 10,000 business miles
0.45p per mile
Over 10,000 business miles
0.25p per mile
Car Fuel Benefit in Kind 2015 – 2017 The benefit in kind charge on free or subsidised fuel for private use is calculated using the appropriate percentage used in calculating car benefit and applying it to a set figure (The car fuel benefit multiplier) Car Fuel Benefit Multiplier
2015 - 16
£ 22,100
2016 – 17
£ 22,200
Company Van Benefit in Kind 2015 – 2017 Zero emission vans will attract a BIK charge of 20% of the standard van BIK. (This charge will increase in subsequent years to 40% in 2016, 60% in 2017, 80% in 2018, 90% in 2019 and from 2020 there will be a single charge applying to all vans).
Tax Year
Van BIK
Fuel BIK
2015 - 16
£ 3,150
£ 594
2016 - 17
£ 3,170
£ 598
Company Vehicle Benefit in Kind: National Insurance Contributions 2015 – 2016 For employers the class 1A rate remains at 13.8%. Fuel Duty The planned fuel duty increase (based on RPI and estimated to be .54p per litre) has been cancelled. Impact: By the end of the tax year 2015-16, this measure is estimated to save the typical motorist £675, a small business with a van £1,400 and a haulier £21,000. (HMRC Budget 2015). Note: There was no announcement in the Autumn Statement as to whether or not the ongoing RPI increase will be reinstated in 2016-17. Salary Sacrifice The government remains concerned about the growth of salary sacrifice and is considering what action, if any, is necessary. The government will gather further evidence, including from employers, to inform its approach going forward.
4
Budget Report 2015 FIMTRAC Budget Report - 2015 Vehicle Excise Duty (VED) https://www.gov.uk/government/publications/vehicle-excise-duty/vehicle-excise-duty Rates for cars and vans will increase in line with RPI and for cars will be reformed from April 2017 to make it fairer for motorists and reflect improvements in new car CO2 emissions Rates for HGV (VED and Road User Levy) will be frozen for 1 year.
VED bands and rates for cars first registered on or after 01 April 2017 CO2 emissions (g/km)
First year rate
Standard rate
Premium Rate
0
£0
£0
1-50
£10
£140
51-75
£25
£140
Cars with a list price of above £40,000 will attract £310 per year surcharge for the first five years in which the standard rate is paid.
76-90
£100
£140
91-100
£120
£140
101-110
£140
£140
110 -130
£160
£140
131-150
£200
£140
151-170
£500
£140
171-190
£800
£140
191-225
£1200
£140
226-255
£1700
£140
Over 255
£2000
£140
MOT The government will explore the options for requiring motorists with new cars to undergo the first MOT after 4 years rather than 3 Motor Insurance (From 01 November 2015) The Insurance Premium Tax (IPT) will be increased from 6% to 9.5% and the FCA will review what can be done to ensure people are encouraged to shop around when insurances are renewed. Despite the IPT increase, the government expects motor insurance to the consumer to be reduced by a crackdown on motor insurance fraud and the claims culture that exists. Motor Insurers are expected to pass on an average saving of £40 to £50 per policy to the consumer.
5
Budget Report 2015 FIMTRAC Budget Report - 2015 Company Car Benefit in Kind Scale Charge Calculator CO2
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
0-50
0%
5%
7%
9%
13%
16%
51-75
5%
9%
11%
13%
16%
19%
76-94
11%
13%
15%
17%
19%
22%
95-99
12%
14%
16%
18%
20%
23%
100-104
13%
15%
17%
19%
21%
24%
105-109
14%
16%
18%
20%
22%
25%
110-114
15%
17%
19%
21%
23%
26%
115-119
16%
18%
20%
22%
24%
27%
120-124
17%
19%
21%
23%
25%
28%
125-129
18%
20%
22%
24%
26%
29%
130-134
19%
21%
23%
25%
27%
30%
135-139
20%
22%
24%
26%
28%
31%
140-144
21%
23%
25%
27%
29%
32%
145-149
22%
24%
26%
28%
30%
33%
150-154
23%
25%
27%
29%
31%
34%
155-159
24%
26%
28%
30%
32%
35%
160-164
25%
27%
29%
31%
33%
36%
165-169
26%
28%
30%
32%
34%
37%
170-174
27%
29%
31%
33%
35%
37%
175-179
28%
30%
32%
34%
36%
37%
180-184
29%
31%
33%
35%
37%
37%
185-189
30%
32%
34%
36%
37%
37%
190-194
31%
33%
35%
37%
37%
37%
195-199
32%
34%
36%
37%
37%
37%
200-204
33%
35%
37%
37%
37%
37%
205-209
34%
36%
37%
37%
37%
37%
210-214
35%
37%
37%
37%
37%
37%
215-219
35%
37%
37%
37%
37%
37%
220 +
35%
37%
37%
37%
37%
37%
Note: Percentages are based on Petrol Cars. Until 2021 there is a 3% surcharge for Diesel Cars (Max 35% / 37%)
6
