New BiK tax changes dropped in ‘rushed’ Finance Bill

New benefit-in-kind (BIK) tax rates for ultra-low emission vehicles, due to take effect from 2020, have been dropped from the Finance Bill. The 15 new bandings, of which 11 were for plug-in cars (sub-75g/km), were confirmed in the Spring Budget. The decision to hold a snap election on 8 June means ministers are having to rush through legislation before parliament closes for business, and as a result ministers have effectively ditched the majority of the finance bill in a bid to ensure it gets through. In what is known as the wash-up period, the Commons and Lords decide what bills they want to let through and which they will effectively put on hold. During the Finance Bill committee stage debate yesterday (April 25) the Government cut the wording, reducing the bill from 762 pages to roughly 140, according to the Chartered Institute of Taxation…

HM Revenue and Customs (HMRC) has opened a consultation on employee Benefits in Kind

The consultation looks at four measures proposed by the Office of Tax Simplification (OTS), and intends to simplify processes for both employers and HMRC. The four areas under consideration are: The abolition of the £8,500 benefit in kind threshold. If an employee earns less than £8,500 (including taxable benefits) then they have to complete a P9D form in place of the P11D. HMRC reports in 2011/2, it only received 15,000 P9D forms. Statutory exemption for trivial benefits in kind. In 2011/12, HMRC reports more than 500,000 P11Ds were completed providing BiKs of £100 or less. The consultation states each P11D costs an estimated £6.50 to process. Views are invited on the definition of a ‘trivial’ BiK and how this exemption should be structured. Exemption for expenses paid or reimbursed by employers. This involves the removing of the current system of dispensations for reporting non-taxable…

New plug-in Mitsubishi Outlander to cost same as diesel

Mitsubishi’s new Outlander Plug-in Hybrid Electric Vehicle (PHEV) has gone on sale in the UK costing the same as the diesel Outlander but offering emissions of just 44g/km and an official 148mpg. Priced from £28,249 for the entry-level GX3h after the Government’s £5,000 Plug-in Car Grant, the Outlander PHEV costs the same as the Outlander diesel GX3 auto, making it the only plug-in hybrid in the UK market that does not carry a price premium for its hybrid technology. The Outlander PHEV combines a 94bhp 2.0-litre four-cylinder petrol engine with electric motors on the front and rear axles, giving a cruising range of 512 miles whilst it can travel up to 32.5 miles on electric power only. The official fuel consumption figure for PHEV is 148mpg whilst emissions are 44g/km, making it particularly suitable for fleet drivers. Attracting a BiK rate of 5%, a…

New fuel benefit and van benefit charges announced for 2014/15

The Treasury has announced that fuel and van benefit charges are to see increases for the next tax year. The changes will see the company car fuel benefit charge multiplier rise from £21,100 for 2013/14 to £21,700 for 2014/15, making free private fuel even less worthwhile for fleet drivers. Meanwhile the van fuel benefit charge rises from £564 for the current tax year to £581. In addition, the van benefit charge is to rise from £3,000 for 2013/14 to £3,090 for 2014/15. Commenting on the changes to the company car fuel benefit charge, Jeff Whitcombe of BCF Wessex Consultants Limited pointed out that not only is there an increase of £600 in line with RPI and as announced in the 2013 Budget but also the appropriate BiK percentage for most cars will increase by 1% in April 2014 and fuel prices are at their…

Whole life costs are critical basis for company car selection

Vehicle whole life costs should be the critical basis on which businesses select which company cars to operate, yet evidence suggests as few as one-in-five organisations use that strategy. Vehicle whole life costs are critical because they highlight that cars which may cost the same in terms of list price or monthly lease rental actually do not in terms of cost per mile to operate. The cost difference can build up over the lifecycle of a car. The principle of basing choice lists on whole life costs can help both employers and employees. For employers it can save money, and for employees, even if the whole life cost figures on two models are identical a different CO2 emissions figure will influence the level of benefit-in-kind tax due. GE’s Company Car Trends report has tracked fleet industry developments for almost a decade via quarterly research…

Company car news – The Budget

BVRLA chief executive John Lewis shares his comments on the Budget: New thresholds for company car Benefit-in-Kind tax: “This decision to rethink the benefit-in-kind thresholds on low-emission company cars will ensure they remain an attractive proposition for drivers. “The market for plug-in vehicles is growing but confidence in this new technology, particularly the costs involved, remains fragile. This move will reassure thousands of potential drivers.” On 100% FYA’s for ultra-low emission lease cars: “Thousands of businesses, particularly SME’s, rely on leasing to acquire their cars, in many cases because they can’t raise the finance elsewhere. “This decision to remove 100% First-Year Allowances won’t stop them leasing, but it will result in them choosing cheaper cars with higher CO2 emissions. “In effect, the government is hindering the momentum towards greener motoring. We think overall car emissions in the UK could rise as a result over…