Chancellor of the Exchequer Philip Hammond delivered his third Budget speech this week (Monday, October 29, 2018).
It was the final Budget prior to the UK leaving the European Union on March 29 next year. However, the Chancellor said that in the event of the UK being unable to secure a Brexit agreement with the European Union, and therefore there being a ‘no-deal’ Brexit, he would hold an emergency Budget.
Below we highlight the Chancellor’s key autumn 2018 Budget measures that will impact on the company car and van sector and the wider motor industry.
As the furore of the VW emissions scandal begins to die down, the fleet industry is now faced with WLTP (World harmonised Light vehicle Test Procedure) which has been developed to provide ‘real-world’ emissions and fuel economy data.
The new WLTP figures provided by manufacturers in mid 2018 are only the beginning. From September 2019, all new vehicles must pass RDE (Real Driving Emissions) tests. RDE tests require a vehicle to be driven on the open road, with equipment strapped to the rear of the vehicle to measure everything that comes out of the exhaust. Critics may argue that RDE tests aren’t perfect but one can hope that they are closer to real world driving conditions.
The change in testing doesn’t stop with RDE (often called RDE1) because January 2020 sees the introduction of RDE2 testing for all newly designed vehicles. The same RDE2 test will also be applied to all vehicles sold from January 2021.
Diesel is particularly vulnerable with the 4% company car tax surcharge and with new tests as manufacturers aim to reduce pollutants such as Nitrogen Oxides (NOx). At the time of writing, April 2018, there are no RDE2 compliant diesel vehicles but interest for these vehicles is growing – the HMRC has confirmed that when they are available, they will not attract the current diesel supplement for company car drivers.
MiSalarySacrifice from Ogilvie Fleet offers an easy way for employees to drive away a brand new, fully insured and maintained vehicle, with one monthly payment through their salary. The Governments recent Finance Bill made some changes to the way the schemes operate, but Richard Jessop, Head of Salary Sacrifice is here to explain some common misconceptions about the changes.
Q1 - ‘salary sacrifice schemes have been scrapped by the Government’
FALSE. All that has changed is the tax treatment. The Government has approved car benefit schemes so it's business as usual.
Q2 - ‘prices go up for all employees’
FALSE. Around half of the salary sacrifice drivers currently in schemes are in cars that would not be affected by the new rules, either because they have opted for a ULEV or because the drivers are already paying more in gross Benefit in Kind (BiK) than the gross salary being sacrificed. For the rest, over a quarter will see an average increase of less than £2.50 per month.
Q3 - ‘there are no longer any financial benefits for employees’
FALSE. There are still huge savings to be made with NI savings and manufacturer discounts.
Q4 - ‘there are no longer any National Insurance savings for employees’
FALSE. NI for employees is NOT affected by the new rules. NI savings remain for all employees.
Q5 - ‘only ULEVs are available through such a scheme’
FALSE. The savings for ULEVs are greater under the new salary sacrifice rules, but drivers can continue to choose any car, make or model with varying savings depending on their own circumstances and the CO2 rating of the vehicle.
Q6 - ‘I can still get a car on a salary sacrifice car scheme’
TRUE. Salary Sacrifice schemes are here to stay and still provide great value and worry free motoring.
Chancellor of the Exchequer Philip Hammond delivered his first Budget speech today (Wednesday, March 8, 2017).
It was also the final spring Budget as Mr Hammond announced in last November’s Autumn Statement a rescheduling of the two major fiscal-related announcements of the Parliamentary year.
Starting in the autumn, Britain will have an Autumn Budget announcing tax changes “well in advance of the start of the tax year”. From 2018 there will be a Spring Statement, responding to the forecast from the Office of Budget Responsibility, but no major fiscal event.
As a result, with today’s Budget coming just four months after the Autumn Statement it has been viewed as a “transitional Budget” with no dramatic or radical announcements.
Indeed many tax measures, including those relating to company car benefit-in-kind tax to the end of 2020/21, Vehicle Excise Duty for cars first registered from April 1, 2017, capital allowances, car fuel benefit charge, van benefit charge, van fuel benefit charge and Insurance Premium Tax had been previously announced.
Below we highlight those measures previously announced, alongside other tax changes and spending plans published in the Budget papers and impacting on the company car and van sector and wider motor industry.