Autumn Statement 2016

Expert analysis on the important changes for company vehicles.

Introduction

On 23rd November, the Chancellor announced this year's Autumn Statement. In a largely business-friendly statement, he made a number of announcements that will have an impact on organisations, employees and fleets.

As experts in company vehicles and fleet management, with extensive experience in analysing the Chancellor Budgets, here's our rundown of what the announcements mean for your organisation.

The Chancellor announced changes to ensure that ‘employees swapping salary for benefits will pay the same tax as the vast majority of individuals who buy them out of their post-tax income’. This includes employees who are able to exchange a cash allowance for a company car.

This means that for vehicles delivered after April 2017, with the exception of Ultra Low Emission Vehicles (ULEVs), currently 75g/km or less, the tax and employer National Insurance advantages of salary sacrifice schemes will be removed. While the good news is that ULEVs are excluded, for employers, there could be an additional administrative burden on payroll. Employees with vehicles provided before 6th April 2017 will be protected from these changes until April 2021, as the benefit in kind value of company cars will be calculated based on the list price and CO2 rating percentage and not the cash alternative or salary sacrificed.

While this protection is positive, an increase in Insurance Premium Tax from 10% to 12% to be introduced in June 2017 will also impact on the costs of salary sacrifice arrangements.

To support organisations in managing these changes, Lex Autolease can model the potential impact on employees, as well as employers, and provide support to implement the changes.

We await further information to be published in the Finance Bill on the 5th December to understand the full impact of the changes on your fleet.

If you have an existing salary sacrifice scheme or a traditional company car scheme where the employee can elect for either cash or a company car, we'd recommend the new legislation is communicated to your business so that employees can make an informed choice when selecting their next vehicle. Companies could also review their existing salary sacrifice and company car schemes to include more ULEVs in the policy.

Photo: traffic queue
Calendar icon
Changes to salary sacrifice schemes in
2021
Pound icon
2%
Increase in Insurance Premium Tax

Please get in touch with our team to discuss further.

Call: 0344 824 0115
Email: marketing@lexautolease.co.uk

An additional £390m of investment by 2020-21 in transport infrastructure was announced. In terms of its relevance to company vehicles, the funding includes an extra £80m towards the charging infrastructure for ULEVs as well as an additional £40m for plug-in grants.

From today until the end of March 2019, the Government announced that there will be 100% first-year allowances for companies investing in charge-points for electric vehicles.

£100m is also to be invested in new Connected and Autonomous Vehicle (CAV) infrastructure. This highlights the Government's continued commitment to strengthening the UK as a leader in the area of CAV technology.

Coins icon
£390m
Additional investment by 2020-21 in transport infrastructure
plug icon
100%
First-year allowances to companies investing in charge-points

Please get in touch with our team to discuss further.

Call: 0344 824 0115
Email: marketing@lexautolease.co.uk

Photo: Motorway junction

The introduction of new lower tax bands for the lowest emitting ULEVs from April 2020 will provide stronger incentives for the uptake of ULEVs by company car drivers.

The system will see the introduction of an additional 15 new bandings of which 11 will be for ULEVs.

While the changes to company car taxation are good news for employees selecting ULEVs from April 2020, in the interim, they could see an increase in company car taxation.

The appropriate percentage for cars emitting greater than 90g CO2/km will rise by 1 percentage point compared to the published 2019/20 rates.

Full details are still to emerge, but the table below provides an overview of the expected changes to Company Car Tax rates and bands announced on 23rd November.

We'd recommend companies review their company car schemes in line with the Government's green agenda to include more ULEVs to offset the impact of this new legislation.

Please get in touch with our team to discuss further.

Call: 0344 824 0115
Email: marketing@lexautolease.co.uk

CO2 emissions (g/km)Taxable percentage of list price*
2017/
2018
2018/
2019
2019/
2020
2020/
2021
0913162
191316(see table below)
5113161915
5513161916
6013161917
6513161918
7013161919
7513161920
8017192221
8517192222
9017192223
9518202324
10019212425
10520222526
11021232627
11522242728
12023252829
12524262930
13025273031
13526283132
14027293233
14528303334
15029313435
15530323536
16031333637
16532343737
17033353737
17534363737
18035373737
18536373737
19037373737
19537373737
20037373737
20537373737
21037373737

Emission figures for vehicles are rounded down. Diesel supplements: * add 3% subject to a maximum charge of 37%.

CO2 emissions (g/km)Mileage capabilityTaxable percentage of list price
0N/A2%
1-50More than 130 miles in zero emission mode2%
1-5070-129 miles5%
1-5040-69 miles8%
1-5030-39 miles 12%
1-50Under 30 miles 14%

We'd recommend companies review their company car schemes in line with the Government's green agenda to include more ULEVs to offset this new legislation.

Please get in touch with our team to discuss further.

Call: 0344 824 0115
Email: marketing@lexautolease.co.uk

The continued freeze on fuel duty for the seventh consecutive year is to be welcomed. Given the rise in oil prices and depreciation of Sterling, this will be a relief for motorists who will save an average £130 each year compared to what they would have been paying under the pre-2010 escalator, rising to a saving of £350 for van drivers.

Odometer icon
Fuel duty
Zero increase

While the continued freeze of fuel duty is good news, recent pump price increases will have impacted on fleet operating costs. With fuel being the 2nd highest cost in fleet, company fuel expenditure and associated expenses processes should be regularly reviewed, to maximise fuel efficiency and encourage appropriate driver behaviour.

Photo: Fuel pump

Please get in touch with our team to discuss further.

Call: 0344 824 0115
Email: marketing@lexautolease.co.uk

Contact us

As more detail emerges regarding the Chancellor's announcement, we will continue to keep you up to date with the impact of the changes on your business.

We hope you found our analysis of the Chancellor's statement helpful. Please get in touch with our team to discuss any of the issues covered - we're here to help you run your vehicles effectively.

Call: 0344 824 0115
Email: marketing@lexautolease.co.uk

Driving Intelligence

Whilst every effort has been made by Lex Autolease to ensure that information given is not misleading, this material is provided only as an overview of the subject and is not a substitute for professional advice. No responsibility can be accepted by Lex Autolease for any loss nor liability occasioned by any person acting or refraining from action as a result of this website page.