Budget 2018: What Company Car Drivers Need to Know

After the government made minor changes to motoring related costs in the Autumn budget, Pendragon Vehicle Management has broken down what this means for almost one million company car drivers across the UK. Fuel Duty Fuel duty will be frozen for a ninth successive year saving the average driver a cumulative £1,000 by April 2020, compared with what they would have paid under the pre-2010 fuel duty escalator. Fuel Benefit charges From 6 April 2019 fuel benefit charges will increase in line with the retail price index (RPI) and the van benefit charge will increase in line with the consumer price index (CPI). Personal Allowance (PA) and higher rate threshold The Budget announces that the government will meet its commitment to raise the PA to £12,500 from April 2019, one year earlier than planned. The threshold will remain at the same level in 2020-21 and then increase by CPI. The £650 increase to the PA means that in 2019-20 a typical basic rate taxpayer will pay £130 less tax than in 2018-19 and £1,205 less tax than in 2010-11. This will increase the number of tax payers taken out of income tax since 2015-16 to 1.74 million. The government will also meet its commitment to increase the higher rate tax to £50,000 from April 2019, one year earlier than planned. The threshold will remain at the same level in 2020-21. This means that there will be nearly one million fewer higher rate taxpayers than in 2015-16. Overall, 32 million individuals will see their tax bill reduced in 2019-20 compared to 2015-16. Enhanced Capital Allowances (ECAs) for electric vehicle charge points The government will extend the ECA for companies investing in electric vehicle charge points to 31 March 2023. This will help achieve the government's ambition for the UK to become a world-leader in the ultra-low emission vehicle market. WLTP Introduction of the Worldwide harmonised Light vehicles Test Procedure (WLTP) - The government will review the impact of WLTP on Vehicle Excise Duty (VED) and company car tax (CCT) to report in the spring. WLTP aims to provide a closer representation of 'real-world' fuel consumption and CO2 emissions. Our thoughts "The 2018 budget lacked any detail and substance from an automotive perspective. In the short-term motor taxes continue to increase and outpace employees' increased earnings. Unfortunately, the £1000 per average driver benefit from frozen fuel duty has been eliminated over this period by significant increases in road fund licences, company car tax, insurance costs and new vehicle list prices. " Neal Francis, Managing Director, Pendragon Vehicle Management commented: "Given the continued lack of clarity on motoring taxes and the additional impact of WLTP, the increasing trend away from company cars for higher rate tax payers is likely to continue."