The Autumn 2018 budget has left fleet decision-makers and company car drivers in the dark over benefit-in-kind tax bands and rates from April 2021.
The Chancellor of the Exchequer Philip Hammond, failed to provide details on company car benefit-in-kind tax following introduction of WLTP, despite the fleet industry widely anticipating clarity.
Instead, he promised to review the impact of WLTP on the company car benefit-in-kind tax regime and Vehicle Excise Duty and to report in spring 2019. But, there was no reference to reviewing capital allowance or the lease rental restriction thresholds, both of which are linked to vehicle emissions.
- For cars registered prior to April 6, 2020, HMRC will continue to use the current NEDC test procedure for the purposes of collecting company car benefit-in-kind tax.
- Cars first registered prior to April 1, 2020 will maintain their current Vehicle Excise Duty treatment.
Therefore, it seems that from April 2020, fleet decision-makers and company car drivers will have to get to grips with two company car benefit-in-kind tax regimes running side-by-side. One based on NEDC emissions data and linked to existing tax bands and rate structure and one, which has yet to be revealed, linked to WLTP emissions data.
ACFO chairman John Pryor said: “ACFO is hugely disappointed that the Budget did not contain any announcement on the company car benefit-in-kind tax regime beyond 2020/21. Budget 2018 has been a waste of a golden opportunity for the Chancellor to provide both clarity and long-term stability to enable fleet decision-makers to shape company car policies.”
Vehicle Excise Duty
A graduated Vehicle Excise Duty regime for vans – similar to that already in place for cars – is to be introduced by the government from April 2021.
Chancellor confirmed the development in the 2018 Budget Statement following a consultation on reform which was undertaken in the wake of the initial announcement of change in the 2018 Spring Statement.
Based on responses to the consultation the government has decided to:
- Further develop its understanding of the impacts of the Worldwide harmonised Light vehicles Test Procedure (WLTP) on CO2 emissions for vans, ahead of announcing the new rates and bands, for introduction from April 2021
- Ensure the new system takes into account the weight of vans by introducing a two-category approach – small and medium sized vans in one category and large vans in a second category. The two-category approach, will be graduated by CO2 when a van is first registered, followed by a standard rate for the second year onwards as with car Vehicle Excise Duty
- Provide ongoing incentives, beyond the first-year, for new zero emission, ultra-low emission and other alternatively fuelled vans from April 2021. That will include a £0 standard rate for zero emission vans.
The government will set out Vehicle Excise Duty bands and rates for vans ahead of Finance Bill 2019/20.
For more information on Budget 2018 click here https://www.gov.uk/government/publications/budget-2018-documents