Budget 2012

The Chancellor of the Exchequer has delivered his 2012 Budget.  Key highlights include:

For our full summary click here 

Company car taxation

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.

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.

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.

 

Fuel Benefit Charge

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.

Van Fuel Benefit Charge & Van Benefit Charge

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 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.

VAT Fuel Scale Charges

The annual adjustment to the VAT fuel scale charge rates in line with current fuel prices will take effect from 1 May 2012.

VED

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 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.

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.

 

BVRLA Fact Sheets

The following fact sheets have been updated following the Budget:

To access the business car tax fact sheet click here
To access the company car tax fact sheet click here.
To access the company van tax fact sheet click here.
To access the company car fuel benefit charge fact sheet click here.
To access the VED regime fact sheet click here.
To access the VAT fuel scale charges fact sheet click here.