Budget 2016 - what does this mean for you?

16 / 03 / 16  |  Industry
General tax rates

What was announced?

The main rate of corporation tax will reduce to 17% in 2020, following a planned cut to 19% in 2017

Insurance premium tax (IPT) increased by 0.5% to 10% to raise funding for flood defence and resilience

Personal tax allowance has increased from £11,000 in 2016/17 to £11,500 in 2017/18 and the higher rate tax threshold will increase by £2,000 to £45,000 over the same period

What does it mean for you?

Changes to personal tax will see more drivers paying company car tax at a lower rate; however a further rise in IPT will add £2 annually on average to motor insurance premiums.

Motoring taxes

What was announced?

The Chancellor announced a further freeze on fuel duty, this is the sixth year in a row that fuel duty has been frozen

The government has extended the 100% first year allowance for businesses purchasing ultra-low emission vehicles (ULEVs) by three years to April 2021. However, the threshold for qualifying cars has reduced from 75g/km to 50g/km CO2 emissions, from April 2018

The main threshold for capital allowances for cars has reduced from 130g/km to 110g/km , from April 2018

What does it mean for you?

The fuel duty freeze is welcome news for fleets and will equate to typical savings of £12 for van drivers each time they fill their tank compared with the plans in place before 2010. It is good news that the government recognises that transport is a major element in the cost base of many businesses and understands the link between low fuel prices and economic growth.

The changes to capital allowances will result in increases to costs of cars that are between 111g/km and 130g/km CO2 emissions. As a result, this may incentivise fleets to review CO2 caps and encourage drivers into cars that are below 111g/km. In addition where fleets purchase their vehicles there will be increases to costs of cars with emissions between 51g/km and 75g/km.

Salary sacrifice

What was announced?

The government continues to monitor the growth of salary sacrifice schemes including cars. This is due to requests for clearance to HMRC rising by over 30% since 2010

What does it mean for you?

As a salary sacrifice provider, we continue to form part of the discussion with government on this matter and are committed to keeping our customers aware of potential future changes.

Low-emission vehicles

What was announced? 

A consultation to reform company car tax bands for ULEV will commence with a view to refocus incentives on the cleanest cars beyond 2020/21

The UK will become a global centre of excellence in developing connected and autonomous vehicles. Activities include trials of driverless cars by 2017, a connected corridor from London to Dover where vehicles can communicate wirelessly and trials of comparative fuel price signs on sections of the M5 by Spring 2016. This is supported by the government’s aim for the UK to adopt a 5G strategy by 2017

What does it mean for you? 

Further announcements on company car tax reform for ULEVs are welcomed with the hope that this will provide fleets with opportunities to gain cost advantages from utilising these vehicles.

Investment and infrastructure

What was announced? 

£61 billion investment in transport over this Parliament including £236m investment to improve road links across the North (M62, A66, A69)

Improvements to rail networks with the green light being given for Cross Rail 2 in London and High Speed 3 between Leeds and Manchester

A £50m Pothole Action fund for England enabling local authorities to fill nearly one million potholes

£130m investment towards repairing roads and bridges that have been damaged in recent storms

The Severn Crossing tolls will be halved from 2018

What does it mean for you? 

Continued commitment to improving our road and rail networks will help to keep fleets mobile and reduce journey times. A cut to the Severn Crossing toll is great news for businesses operating in Wales and the South West.

Other useful information

As a direct result from recommendations, the government is introducing a tougher regime to clamp down on rogue claims management companies (CMCs) that provide bad service and nuisance calls to those involved in vehicle accidents including action to cap amounts that CMCs charge

After reviewing the rules around travel and subsistence the government has concluded that the current rules are well understood and work effectively for the majority of employees and therefore there will be no changes made at this time