Autumn Budget 2017

Date Posted: 23/11/2017 08:35:59

Chancellor of the Exchequer Philip Hammond delivered his second Budget speech on Wednesday, November 22, 2017. Below we highlight the Chancellor’s key Budget measures that will impact on the company car and van sector and wider motor industry.

Company car benefit-in-kind tax

Two measures were announced in the Budget that impact on company car benefit-in-kind tax:

  • A rise in the existing company car tax diesel supplement from 3% to 4%, with effect from April 6, 2018.
  • Carbon dioxide (CO2) figures compatible with the current New European Driving Cycle (NEDC) test procedure will be used by HM Revenue and Customs for the purposes of collecting company car tax until April 2020. The government will however also take forward legislation in a future Finance Bill that will change the system for measuring carbon dioxide emissions to the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) from April 2020.

Diesel supplement increase

Approximately 800,000 employees who drive a diesel company car will pay more benefit-in-kind tax, according to the government as a result of its decision to increase the existing company car benefit-in-kind tax supplement from 3% to 4% from April 6, 2018.

Introduction of WLTP for company car benefit-in-kind tax and VED

Company car benefit-in-kind tax and Vehicle Excise Duty is based on CO2 emissions figures from the current NEDC test procedure. From September 1, 2017 the new WLTP test procedure was introduced. The government has clarified that NEDC figures will continue to be used until April 2020, when the new WLTP figures will be introduced.

Taxation of benefits-in-kind and employee expenses

In March 2017, the government published a call for evidence as to how the taxation of employee business expenses could change. Employers can choose to remunerate their employees in a range of different ways, but the tax system treats those different forms of remuneration inconsistently. As a result, the government said it was considering how the tax system could be made fairer and more coherent, including by looking at the taxation of benefits-in-kind and employee expenses.

Vehicle Excise Duty

As part of the government’s focus on improving air quality - and in addition to the rise in the diesel company car tax supplement - a Vehicle Excise Duty (VED) supplement will apply to new diesel cars first registered from April 1, 2018, so that their First Year Rate will be calculated as if they were in the VED band above.

Van benefit charge and van and car fuel benefit charge 2018/19

The government will increase the van benefit charge and the van and car fuel benefit charges by the September 2017 Retail Price Index. The change will have effect on and after April 6, 2018. The government will legislate by statutory instrument in December 2017 to ensure the changes are reflected in tax codes for 2018 to 2019.

Car fuel benefit charge multiplier will increase to £23,400 (2017/18: £22,600).

The flat-rate van fuel benefit charge will increase to £633 (2017/18: £610).

The flat-rate van benefit charge will increase to £3,350 (2017/18: £3,230).

Fuel duty

The scheduled rise in fuel duty from April 2018 has been cancelled. It is the eighth consecutive year that there has been no increase.

Benefits-in-kind: electric vehicles

The government has clarified existing legislation so that from April 2018, there will be no benefit-in-kind charge on electricity that employers provide to charge employees’ electric vehicles.

For a detailed view of the above topics and more, download the PDF.

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