Fleet

And this year’s Volkswagen Company Car and Van Tax Guide

will prove useful.

K I N G   H E N R Y

Account / Job title Volkswagen / Fleet Company Car Order / Job number Studio number KH2606 Job location 27 March 2013 / Q1 Size 148x105mm Trim Proof stage 2 Run out Page 1 of 1 Document name 148x105_Fleet_Company_car_KH2606

148x105_Fleet_Brand_KH2606_Layout 1 28/03/2013 16:26 Page 1

Budget 2013 headlines

The coalition Government’s fourth Budget statement contained a number of announcements impacting on the UK company car and van market. These are:

– Two new company car benefit-in-kind tax bands from 6 April, 2015, at 0-50g/km CO2 and 51-75g/km CO2

– Government will review company car tax incentives for ultra-low emission vehicles at the 2016 Budget

– Inflation-linked increases to car and van Vehicle Excise Duty from 1 April, 2013

– The 100% first year capital allowance for businesses purchasing low emission cars is extended to 31 March, 2018

– The CO2 emissions threshold below which cars are eligible for 100% first year capital allowance is cut from 95g/km to 75g/km from 1 April, 2015

– The case for extending the 100% first year allowance for cars beyond 1 April, 2018, will be reviewed at the 2016 Budget alongside a review of the 130g/km main capital allowance rate (18%) threshold, with any amendments taking effect from April 2018

– The previously announced 1.89p per litre fuel duty increase due on 1 September, 2013, is cancelled

– Car fuel benefit charge to rise from £20,200 to £21,100 in 2013/14 and inflation rate in 2014/15

– Van benefit charge frozen at £3,000 in 2013/14 and will increase by inflation rate from 6 April, 2014

– Van fuel benefit charge to rise from £550 to £564 in 2013/4 and by inflation rate in 2014/15

– Main rate of Corporation Tax is cut to 23% in 2013/14, 21% in 2014/15 and 20% in 2015/16

– No change in Class 1A National Insurance rates

– No change in tax-free Approved Mileage Allowance Payment rates

Vehicle Excise Duty (VED)

2 3

On 1 April, 2013, VED – most standard rates and first year rates – increased in line with the rate of inflation (see chart, page 4).

However, standard rates for cars up to 120g/km of CO2 were frozen.

Additionally, first year rates for cars emitting up to 130g/km remain at £0.

The Government had been considering reviewing the structure of VED but has now abandoned any reform in this Parliament.

Legislation will be introduced to put off-the-road declarations on to an indefinite basis.

From 8 April, 2013, the VED exemption for disabled drivers will be extended to individuals receiving the enhanced mobility PIP (Personal Independence Payment). A new 50% VED discount will be introduced for individuals receiving the standard mobility PIP.

The amount of time that a tax disc does not have to be displayed following the payment of road tax will be extended from five working days to 14 calendar days. Additionally, legislative changes will allow advanced registration year round and 14 days in advance rather than just four days.

Golf: official Government fuel consumption figures in mpg (litres per 100km): urban 34.9 (8.1) – 61.4

(4.6), extra urban 52.3 (5.4) – 85.6 (3.3), combined 44.1 (6.4) – 74.3 (3.8). CO2 emissions 149-99g/km.

WINNERBest Lower Medium Car

4 5

Company car tax 2013/14 to 2016/17

The Government confirmed previously announced company car benefit-in-kind tax rates for all but ultra-low CO2 emitting vehicles up to the end of 2016/17.

In future, it will give three years’ advance notice of rates. Therefore, company car tax rates for 2017/18 will be announced in the 2014 Budget.

However, the Budget revealed reduced tax rates from those announced in the 2012 Budget to support demand for ultra-low emission vehicles with effect from 6 April, 2015. They are:

– Two new company car tax bands at 0-50g/km CO2 and 51-75g/km CO2

– The appropriate percentage of P11D price subject to tax for the 0-50g/km CO2 band will be 5% in 2015/16, and 7% in 2016/17

– The appropriate percentage of P11D price subject to tax for the 51-75g/km CO2 band will be 9% in 2015/16 and 11% in 2016/17

– In 2017/18 there will be a three percentage point differential between the 0-50g/km and 51-75g/km CO2 bands, and between the 51-75g/km and 76-94g/km CO2 band

– In 2018/19 and 2019/20 there will be a two percentage point differential between the 0-50g/km and 51-75g/km CO2 bands and the 51-75g/km and 76-94g/km CO2 bands

Additionally, the Government will review company car tax rates for ultra-low emission vehicles in the 2016 Budget in the light of market developments.

A Up to 100 £0 £0

B 101-110 £0 £20

C 111-120 £0 £30

D 121-130 £0 £105

E 131-140 £125 £125

F 141-150 £140 £140

G 151-165 £175 £175

H 166-175 £285 £200

I 176-185 £335 £220

J 186-200 £475 £260

K** 201-225 £620 £280

L 226-255 £840 £475

M Above 255 £1,065 £490

VED

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CO

2

emis

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s (g

/km

)

2013

/201

4Fi

rst y

ear r

ate*

2013

/201

4 St

anda

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Vehicle Excise Duty from 1 April, 2013, for cars registered on or after 1 March, 2001

HM Revenue & Customs calculates that a basic rate taxpayer driving a zero CO2 emitting car with a P11D price of approximately £28,500 will pay £450 less company car tax in 2015/16 compared to the policy announced in the 2012 Budget. A higher rate taxpayer will pay £900 less in 2015/16.

They will pay £470 less than a basic rate taxpayer with a conventionally fuelled car that emits 115-119g/km (18% in 2015/16) with a P11D price of approximately £18,000. A higher rate taxpayer will pay £940 less.*Alternative fuel discount of £10 applies to all cars

** Includes cars emitting over 225g/km registered before 23 March, 2006

6 7

0 0 0 N/A N/A

5 1-75 1-75 0-50 N/A

7 N/A N/A N/A 0-50

9 N/A N/A 51-75 N/A

10 76-94 N/A N/A N/A

11 95-99 76-94 N/A 51-75

12 100-104 95-99 N/A N/A

13 105-109 100-104 76-94 N/A

14 110-114 105-109 95-99 N/A

15 115-119 110-114 100-104 76-94

16 120-124 115-119 105-109 95-99

17 125-129 120-124 110-114 100-104

18 130-134 125-129 115-119 105-109

19 135-139 130-134 120-124 110-114

20 140-144 135-139 125-129 115-119

21 145-149 140-144 130-134 120-124

% o

f P1

1DPr

ice

2013

/14

CO

2 (g

/km

)

2014

/15

CO

2 (g

/km

)

2015

/16

CO

2 (g

/km

)

2016

/17

CO

2 (g

/km

)

22 150-154 145-149 135-139 125-129

23 155-159 150-154 140-144 130-134

24 160-164 155-159 145-149 135-139

25 165-169 160-164 150-154 140-144

26 170-174 165-169 155-159 145-149

27 175-179 170-174 160-164 150-154

28 180-184 175-179 165-169 155-159

29 185-189 180-184 170-174 160-164

30 190-194 185-189 175-179 165-169

31 195-199 190-194 180-184 170-174

32 200-204 195-199 185-189 175-179

33 205-209 200-204 190-194 180-184

34 210-214 205-209 195-199 185-189

35 215+ 210+ 200-204 190-194

36 N/A N/A 205-209 195-199

37 N/A N/A 210+ 200+

% o

f P1

1DPr

ice

Company car tax 2013/14 to 2016/17

– 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%20

13/1

4C

O2

(g/k

m)

2014

/15

CO

2 (g

/km

)

2015

/16

CO

2 (g

/km

)

2016

/17

CO

2 (g

/km

)

– In 2016/17 petrol and diesel cars treated equally for company car tax purposes.

HM Treasury’s previously announced changes with effect from 1 April, 2013, to the company car capital allowance regime were confirmed in the Budget.

Capital allowance denotes the rate at which companies can write down the cost of buying a car against their taxable profits. The 2013/14 thresholds are:

– Vehicles up to 95g/km (2012/13: 110g/km): Companies can write down the full cost against their taxable profits

– Vehicles emitting 96-130g/km (2012/13: 111-160g/km): Companies can write down 18% of the cost of the car against their taxable profits each year, on a reducing balance basis

– Vehicle above 130g/km (2012/13: 160g/km): Companies can write down 8% of the cost of the car against their taxable profits each year, on a reducing balance basis

Additionally, leasing companies are no longer able to claim 100% first year writing down allowance on cars with emissions up to 95g/km. Instead they are restricted to 18% (0-130g/km) and 8% (from 131g/km) on a reducing balance basis.

Further, the Government has announced:

– An extension of the 100% first year allowance due to end 31 March, 2015, for a further three years to 31 March, 2018

– From 1 April, 2015, the CO2 threshold at which the 100% allowance applies will reduce from 95g/km to 75g/km

– In the 2016 Budget a review of the case for extending the full year allowance beyond 1 April, 2018, alongside a review of the 130g/km main rate threshold (18%) with any amendments taking effect from 1 April, 2018

8 9

Capital allowances and lease rental restriction

Calculating capital allowances and lease rental restrictionsThe examples opposite highlight the additional cost to companies in 2013/14 of a car with emissions of 96g/km and 131g/km compared with 2012/13.

Polo: official Government fuel consumption

figures in mpg (litres per 100km): 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

emissions 139-91g/km.

Example 1: outright purchase

Vehicle price: £20,000CO2 emissions: 96g/kmWDA: 18% (2012/13: 100%)

2013/14 (2012/2013 in brackets)Corporation tax: 23% (24%)Tax relief: £20,000 x 18% x 23% = £828 (£4,800)Tax written down value carried forward = £16,400 (nil)

Example 2: lease

Monthly rental: £400 (£4,800 pa)CO2 emissions: 131g/kmLease rental restriction: 15% (2012/13: no restriction)

2013/14 (2012/2013 in brackets)Corporation tax: 23% (24%)Annual rental cost deducted against profits: £4,800 x 85% = £4,080 (£4,800)Tax relief: £4,080 x 23% = £938 (£1,152)2014/15Corporation tax: 21%Tax relief: £4,080 x 21% = £857

Lease rental restrictionThis allows the cost of a company car lease to be deducted against a company’s taxable profits.

From 1 April, 2013, leased cars are treated in one of two ways:

– Cars with emissions up to 130g/km (2012/13: up to 160g/km) face no lease rental restriction, meaning that the cost of the lease is fully deductible against taxable corporate profits

– Cars with emissions of 131g/km or more (2012/13: 161g/km) face a 15% restriction, meaning companies can only deduct 85% of any rental payments against their taxable profits

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Example 1

Volkswagen Passat Saloon BlueMotion TDI 5dr 1.6 105PSP11D price: £20,985 CO2 emissions: 109g/km

2013/14 (16% BIK rate)Cash value (P11D x BIK): £20,985 x 16% = £3,358Employers’ Class 1A NIC: £3,358 x 13.8% = £463 2014/15 (17% BIK rate)Cash value (P11D x BIK): £20,985 x 17% = £3,567 Employers’ Class 1A NIC: £3,567 x 13.8% = £492 2015/16 (19% BIK rate)Cash value (P11D x BIK): £20,985 x 19% = £3,987Employers’ Class 1A NIC: £3,987 x 13.8% = £550

Class 1A National Insurance Contributions

Employers pay Class 1A National Insurance Contributions (NIC) on company cars and fuel at 13.8%.

NIC is linked to the P11D value and the CO2 emission figure of a vehicle.

As the company car benefit-in-kind tax table (pages 6-7) highlights, emission

thresholds have tightened in 2013/14 and will tighten further in future years.

The only way that employers can limit NIC increases is to ensure choice lists feature models with low CO2.

Sample calculations below highlight the impact of the tax changes on NIC.

Example 2

Volkswagen CC GT BlueMotion Technology TDI 2.0 140PS P11D price: £26,940 CO2 emissions: 120g/km

2013/14 (19% BIK rate)Cash value (P11D x BIK): £26,940 x 19% = £5,119Employers’ Class 1A NIC: £5,119 x 13.8% = £706 2014/15 (20% BIK rate)Cash value (P11D x BIK): £26,940 x 20% = £5,388 Employers’ Class 1A NIC: £5,388 x 13.8% = £744 2015/16 (22% BIK rate)Cash value (P11D x BIK): £26,940 x 22% = £5,927 Employers’ Class 1A NIC: £5,927 x 13.8% = £818

Cars offering exceptional economy and low emissions twinned with great performance are available across the Volkswagen range and are badged BlueMotion and BlueMotion Technology.

We are taking efficiency to new levels with the mid-2013 launch of the new Golf BlueMotion (88.3mpg/85g/km CO2). It will join BlueMotion models across our Polo, Passat and Passat Estate ranges in offering businesses the highest level of economy.

Those models feature the full complement of Volkswagen’s 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 breadth of BlueMotion Technology modifications varies from model

Efficiency and economy with BlueMotion

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Passat saloon: official Government fuel consumption figures in mpg (litres per 100km): 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 emissions

180-109g/km.

range to model range, but may include a stop-start function, battery regeneration and a multifunction computer which displays visual gear change recommendations.

Whatever company car you’re looking for, there’s sure to be one with a BlueMotion Technology variant as the line-up now includes new Golf offering up to 74.3mpg with emissions of 99g/km, Golf Plus, Golf Estate, Golf Cabriolet, Scirocco, Jetta, Passat, Passat Estate, CC, Eos, Tiguan, Touran, Sharan, Touareg, Beetle and up!.

Our focus on CO2 reduction continues with the 2013/14 launch of pure electric versions of Golf and up!, as well as the start of production of the 313mpg XL1 plug-in hybrid two-seater.

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Employer-provided fuel for private mileage

Employees pay benefit-in-kind tax on fuel for private use paid for by their employer, while the company pays Class 1A NIC on the taxable scale charge. The charge is linked to a set figure, known as the fuel benefit charge multiplier. In 2013/14 the figure rises to £21,100. This will increase by the rate of inflation in 2014/15. A separate figure applies for commercial vehicles (see page 14).

2013/14: Calculating your ‘free’ fuel liabilityTo calculate the employees’ benefit-in-kind liability, you need to know:– Combined fuel consumption cycle of your company car and price of fuel used– The car’s CO2 emissions and the linked benefit-in-kind tax percentage– The marginal tax rate of the driver (20% or 40%)– The Government’s fuel benefit charge multiplier (now £21,100)

Mileage reimbursement rates

HM Revenue & Customs’ Approved Mileage Allowance Payments (AMAPs) set tax and National Insurance exempted rates for business mileage in a private car.

For 2013/14, the rate of reclaim for the first 10,000 miles remains at 45p per mile and 25p per mile thereafter.

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 for tax purposes

– For employees earning less than £8,500 there is no reporting requirement as no tax is payable

– Regardless of an employee’s earnings, 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.

In addition to claiming AMAP rates, an allowance for passengers (employees and volunteers) at 5p per mile can also be paid and is National Insurance free.

All cars 45p 25p

Up to 10,000 miles Over 10,000 miles

AMAP rates

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Example 1 - the driver’s view

Volkswagen Golf SE TDI 5dr 1.6 105PS 5 speed manualCO2 emissions: 99g/kmFuel economy: 74.3mpg (combined)Benefit-in-kind tax: 14% (2013/14)

Taxable value (fuel benefit charge multiplier x benefit-in-kind): £21,100 x 14% = £2,954

Tax charge for a 20% taxpayer: £591 (worth 408 litres of diesel)Breakeven is 6,663 private miles

Tax charge for a 40% taxpayer: £1,182 (worth 815 litres of diesel)Breakeven is 13,326 private miles

Example 2 - the employer’s view

To calculate the cost of providing free fuel employers must know: fuel cost, VAT rate, VAT fuel scale charge linked to CO2, Class 1A NIC rate, Corporation Tax rate.

Fuel cost (10,000 private miles at £1.45 per litre): £890VAT recovery at 20%: (£148.33)VAT fuel scale charge: £112.50Class 1A NIC: £407.65Total: £1,261.82

Corporation tax at 23%: (£290.22)

Annual net cost to company of providing ‘free’ fuel: £971.60

CC: official Government fuel consumption figures in mpg (litres per 100km): urban 26.2 (10.8) – 49.6

(5.7); extra urban 47.9 (5.9) – 72.4 (3.9); combined 36.7 (7.7) – 61.4 (4.6). CO2 emissions 179–120g/km.

14 15

Commercial vehicles 2013/14

Company light commercial vehicles used privately incur benefit-in-kind tax for the driver, based on a taxable value of £3,000 in 2013/14. The charge will increase by the rate of inflation in 2014/15. All electric vans are exempt from benefit-in-kind tax until the end of the 2014/15 financial year.

If free fuel is also provided by the employer for private mileage, an additional van fuel benefit charge applies. The charge for 2013/14 has increased from £550 to £564. It increases by the rate of inflation in 2014/15.

The annual tax payable for private use of a van in 2013/14 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 2013/14 is: For a 20% taxpayer: £564 x 20% = £113 For a 40% taxpayer: £564 x 40% = £226

Class 1A National Insurance – vansEmployer Class 1A National Insurance contributions for vans are calculated on the same basis as benefit-in-kind tax liabilities. The amounts payable are calculated by multiplying the taxable values by 13.8%. See examples below.

– Class 1A National Insurance private use of a van (£3,000 x 13.8%): £414 – Class 1A National Insurance private use of fuel (£564 x 13.8%): £78

Capital allowances/lease rental restrictionsBusiness expenditure on vans (ex-VAT) qualifies for tax relief as capital allowances at 18% a year on a reducing balance basis. There is no balancing charge when a van is sold. A 100% first year capital allowance applies to the purchase of electric vans. Lease rental restrictions do not apply to vans.

Vehicle Excise Duty – vans registered on or after 1 March, 2001– Registered on/after 1 March, 2001 (not over 3,500kg revenue weight): £220– Euro 4 light goods vehicles registered between 1 March, 2003, and 31 December, 2006 (not over 3,500kg revenue weight): £140– Euro 5 light goods vehicles registered between 1 January, 2009, and 31 December, 2010 (not over 3,500kg revenue weight): £140

For more information on the Volkswagen Commercial Vehicle range telephone 0800 808 9998 or visit www.volkswagen-vans.co.uk/fleet

The explanations and data set out in this guide are for general information only, 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 2013.

Fuel consumption figures 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 passenger car range or to request a test drive, call the Fleet Business Centre on 0800 38 989 38 or visit www.volkswagen.co.uk/fleet

Produced in association with

K I N G   H E N R Y

Account / Job title Volkswagen / Fleet Company Car Order / Job number Studio number KH2606 Job location 27 March 2013 / Q1 Size 148x105mm Trim Proof stage 2 Run out Page 2 of 1 Document name 148x105_Fleet_Company_car_KH2606

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