Volkswagen Company Car and Van Tax Guide 2015/2016.

Produced in association with

Budget 2015 headlines

– Company car benefit-in-kind tax

(BIK) thresholds for 2019/20 were

published. Rates are now known for

the next five financial years.

– The appropriate percentage of list

price subject to tax will increase by

three percentage points for all cars,

irrespective of their CO2 emissions, in

2019/20, up to a maximum of 37%.

– The appropriate percentage of

list price subject to tax of ultra-low

emission vehicles (ULEVs) – 75g/km

and less – is lower than previously

announced (see page 5).

– The Government will review

incentives for ULEVs in the light of

market developments at Budget 2016,

to inform decisions on company car

tax from 2020/21 onwards.

– Inflation-linked increases to car and

van Vehicle Excise Duty (VED) from

April 1, 2015, although the increase

only applies to higher carbon dioxide

emitting vehicles (see page 3).

– The planned 0.54p per litre + VAT

fuel duty increase due on September

1, 2015, is cancelled. The year-on-year

fuel duty freeze by the Government,

over five years, is calculated to have

saved a typical motorist £675, and

£1,400 for a small business with a van,

by the end of 2015/16.

– Car fuel benefit charge to rise from

£21,700 in 2014/15 to £22,100 in

2015/16, and by inflation in 2016/17.

– Van benefit charge to rise from

£3,090 in 2014/15 to £3,150 in

2015/16, and by inflation in 2016/17.

– Van benefit charge support for

zero emission vans is to be extended

to April 5, 2020, on a tapered basis.

From 2015/16, the charge paid by

zero-emission vans (0% in 2014/15)

will be 20% of the rate paid by

conventionally-fuelled vans, followed

by 40% in 2016/17, 60% in 2017/18,

80% in 2018/19 and 90% in 2019/20.

2 3

Vehicle Excise Duty (VED)

On April 1, 2015, VED – standard and

first-year rates – increased in line

with inflation. However, in reality the

increase in first-year rates applied only

to cars in Band H and above and the

rise in the standard rate to cars in B

and K and above.

The coalition Government’s sixth and final budget, ahead of the 2015 general

election, contained a number of announcements impacting on the UK company

car and van market. These are:

The rates will be equalised in 2020/21,

when there will be a single benefit

charge applying to all vans.

– Van fuel benefit charge to rise from

£581 in 2014/15 to £594 in 2015/16

and by inflation in 2016/17.

– No new announcements in car

capital allowances or lease rental

restriction rules. But, as announced

in Budget 2014, from April 1, 2015,

the CO2 threshold at which the 100%

capital allowance applies reduces from

95g/km to 75g/km.

Golf: official government fuel consumption figures

in mpg (litres per 100km): urban 30.1 (9.4) – 74.3

(3.8), extra urban 47.9 (5.9) – 94.2 (3.0), combined

39.8 (7.1) – 88.3 (3.2). CO2 emissions 165 – 0g/km.

This information is based on 2015 Model Year.

– Main rate of corporation tax is

cut from 21% in 2014/15 to 20% in

2015/16 and will remain unchanged

in 2016/17.

– No change in Class 1A National

Insurance rates.

– No change in tax-free Approved

Mileage Allowance Payment

(AMAP) rates.

4 5

Company car tax 2015/16 to 2019/20

– In 2019/20 the appropriate

percentage of list price subject to

tax will increase by three percentage

points for all cars, irrespective of CO2

emissions, up to a maximum of 37%.

– To encourage a new generation

of low-emission vehicles, such as

electric and plug-in hybrid models, the

Government is to increase tax rates on

the two lowest thresholds – 0-50g/km

and 51-75g/km – by less than planned.

– In Budget 2014, the Government

announced that in 2019/20 there would

be a two percentage point differential

between 0-50g/km and 51-75g/km

and 51-75g/km and 76-94g/km bands. That would have resulted in the 0-50g/km band increasing by five percentage points in 2019/20 to 18% and the 51-75g/km band by four percentage points to 20%. The impact of increasing the two band rates more slowly – by three percentage points – means the 2019/20 rates for 0-50g/km cars is 16% and for 51-75g/km is 19%.

Additionally, the Government will review incentives for ultra-low emission vehicles in the light of market developments at Budget 2016, to inform decisions on company car tax from 2020/21 onwards.

A Up to 100 0 0

B 101-110 0 20

C 111-120 0 30

D 121-130 0 110

E 131-140 130 130

F 141-150 145 145

G 151-165 180 180

H 166-175 295 205

I 176-185 350 225

J 186-200 490 265

K** 201-225 640 290

L 226-255 870 490

M Over 255 1,100 505

VED band

CO2

emissions (g/km)

2015/2016First-year rate*

2015/2016 Standard rate*

Vehicle Excise Duty from April 1, 2015, for cars registered on or after March 1, 2001

2015/16 is the final year for which the 3% company car tax surcharge applies to diesel vehicles. From 2016/17, as previously announced, petrol and diesel cars will be treated equally for company car tax purposes, so company car drivers who choose diesel cars will see tax bills reduce in 2016/17 before rising again in 2017/18. That’s because company car tax rates will increase by two percentage points in 2016/17, but the abolition of the 3% surcharge means drivers of diesel models will see their tax bills reduce by one percentage point when compared with 2015/16, before rising two percentage points in 2017/18.

 *Alternative fuel discount of £10 applies to all cars in 2015/16

** Includes cars emitting over 225g/km registered before March 23, 2006

The Government confirmed previously announced company car BIK tax rates for all cars up to the end of 2018/19. It then announced company car tax rates for 2019/20, making thresholds for a full five years known. That enables fleet decision-makers and company car drivers to select vehicles in the full knowledge of their future tax liability.

6 7

0 N/A N/A N/A N/A N/A

5 0-50 N/A N/A N/A N/A

7 N/A 0-50 N/A N/A N/A

9 51-75 N/A 0-50 N/A N/A

10 N/A N/A N/A N/A N/A

11 N/A 51-75 N/A N/A N/A

12 N/A N/A N/A N/A N/A

13 76-94 N/A 51-75 0-50 N/A

14 95-99 N/A N/A N/A N/A

15 100-104 76-94 N/A N/A N/A

16 105-109 95-99 N/A 51-75 0-50

17 110-114 100-104 76-94 N/A N/A

18 115-119 105-109 95-99 N/A N/A

19 120-124 110-114 100-104 76-94 51-75

20 125-129 115-119 105-109 95-99 N/A

21 130-134 120-124 110-114 100-104 N/A

% of P11DPrice

Company car tax 2015/16 to 2019/20

– For tax year 2015/16 add 3% for diesel cars up to a maximum of 37%.

22 135-139 125-129 115-119 105-109 76-94

23 140-144 130-134 120-124 110-114 95-99

24 145-149 135-139 125-129 115-119 100-104

25 150-154 140-144 130-134 120-124 105-109

26 155-159 145-149 135-139 125-129 110-114

27 160-164 150-154 140-144 130-134 115-119

28 165-169 155-159 145-149 135-139 120-124

29 170-174 160-164 150-154 140-144 125-129

30 175-179 165-169 155-159 145-149 130-134

31 180-184 170-174 160-164 150-154 135-139

32 185-189 175-179 165-169 155-159 140-144

33 190-194 180-184 170-174 160-164 145-149

34 195-199 185-189 175-179 165-169 150-154

35 200-204 190-194 180-184 170-174 155-159

36 205-209 195-199 185-189 175-179 160-164

37 210+ 200+ 190+ 180+ 165+

2015/16CO2 (g/km)

2016/17CO2 (g/km)

2017/18CO2 (g/km)

2018/19CO2 (g/km)

2019/20CO2 (g/km)

% of P11DPrice

2015/16CO2 (g/km)

2016/17CO2 (g/km)

2017/18CO2 (g/km)

2018/19CO2 (g/km)

2019/20CO2 (g/km)

– From 2016/17 petrol and diesel cars are treated equally for company car tax

purposes.

In 2015/16 a tightening of capital allowance emission thresholds comes into

effect following an announcement two years ago.

From April 1, 2015, thresholds for capital allowances on cars bought outright are:

– Vehicles up to 75g/km (reduced from 95g/km): companies can write down the

full cost against their taxable profits.

– Vehicles emitting 76-130g/km (reduced from 96-130g/km): companies can

write down 18% of the cost of the car against their taxable profits each year, on

a reducing balance basis.

– Vehicles above 130g/km: companies can write down 8% of the cost of the car

against their taxable profits each year, on a reducing balance basis.

– All ULEVs (75g/km or less) will be eligible for 100% first-year capital

allowances to March 31, 2018.

– Leasing companies are ineligible to claim 100% first-year writing down

allowance on cars. Instead, they are restricted to 18% (0-130g/km) and 8%

(from 131g/km) on a reducing balance basis.

As previously announced, it is expected that Budget 2016 will review the case

for extending the full-year allowance beyond April 1, 2018, alongside a review

of the 130g/km main rate threshold (18%), with any amendments taking effect

at the same time.

8 9

Capital allowances and lease rental restriction

Calculating capital allowances and lease rental restrictionsThe Government’s decision to cut corporation tax to 20% in 2015/16 from

21% in 2014/15 will deliver cash savings to businesses on leased cars and cars

bought outright. The corporation tax main rate will remain at 20% in 2016/17.

The examples (right) highlight the position for companies in 2015/16 of a car

with emissions of 76-130g/km and 131g/km, compared with 2014/15.

Volkswagen CC: official government fuel

consumption figures in mpg (litres per 100km):

urban 26.2 (10.8) – 53.3 (5.3), extra urban 47.9

(5.9) – 68.9 (4.1), combined 36.7 (7.7) – 62.8

(4.5). CO2 emissions 179-120g/km.

This information is based on 2015 Model Year.

Vehicle price: £20,000

CO2 emissions: 76-130g/km

Writing-down allowance: 18%

2015/16 (2014/15 in brackets)Corporation tax: 20%

(2014/15: 21%)

Tax relief: £20,000 x 18% x 20% =

£720 (£756)

Tax written-down value carried

forward: £20,000 x (100-18%) =

£16,400 (£16,400)

Monthly rental: £400 (£4,800 pa)

CO2 emissions: 131g/km or more

2015/16 (2014/15 in brackets)Lease rental restriction: 85%

(2014/15: 85%)

Corporation tax: 20% (21%)

Annual cost deducted against

profits: £4,800 x 85% = £4,080

(£4,080)

Tax relief: £4,080 x 20% = £816

(£857)

Since April 1, 2013, leased cars are

treated in one of two ways:

– Cars with emissions of 130g/km or

less face no lease rental restriction,

meaning that the cost of the lease

is fully deductible against taxable

corporate profits.

– Cars with emissions of 131g/km or

more face a 15% restriction, meaning

companies can only deduct 85% of any

rental payments against their taxable

profits.

The Government’s decision to cut

corporation tax from 23% in 2013/14

to 21% in 2014/15, with a further cut

to 20% in 2015/16, will deliver cash

savings to businesses.

Example 1 – outright purchase

Example 2 – lease

11

Volkswagen Polo SE 1.4-litre TDI BMT 75PS 5-door 5-speed manualP11D price: £15,420CO2 emissions: 93g/km

2015/16 (16% BIK rate)Cash value (P11D x BIK)£15,420 x 16% = £2,467Employer’s Class 1A NIC: £2,467 x 13.8% = £3402016/17 (15% BIK rate)£15,420 x 15% = £2,313Employer’s Class 1A NIC: £2,313 x 13.8% = £3192017/18 (17% BIK rate)£15,240 x 17% = £2,621Employer’s Class 1A NIC: £2,621 x 13.8% = £362

Class 1A National Insurance Contributions

Employers pay Class 1A National Insurance contributions (NIC) on company cars and fuel at 13.8%. NIC is linked to P11D value and CO2 emissions. As the company car BIK tax table (pages 6-7) highlights, emission thresholds have tightened in 2015/16 and will tighten further in future years. However, the decision to remove the 3% BIK tax surcharge on diesel cars in

2016/17 means companies will benefit from a reduction in Class 1A NIC before payments rise in 2017/18. The only way employers can limit a year-on-year increase in their NIC – with the exception of 2016/17 on diesel models – is to ensure choice lists feature models with low carbon dioxide emissions. Sample calculations below highlight the impact of the tax changes on NIC.

Volkswagen Golf GTD 2.0-litre TDI BMT 184PS 5-door 6-speed manualP11D price: £27,535CO2 emissions: 112g/km

2015/16 (20% BIK rate)Cash value (P11D x BIK)£27,535 x 20% = £5,507Employers Class 1A NIC: £5,507 x 13.8% = £7602016/17 (19% BIK rate)£27,535 x 19% = £5,232Employers Class 1A NIC: £5,232 x 13.8% = £7222017/18 (21% BIK rate)£27,535 x 21% = £5,782Employers Class 1A NIC: £5,782 x 13.8% = £798

The eighth-generation Passat and Passat Estate models are packed with innovations and technology. Bridging the gap between the mainstream upper-medium and luxury saloon and estate markets, the all-new Passat range democratises luxury and is taking the market by storm, having been named Europe’s Car of the Year 2015.

Five trim levels are available – S, SE, SE Business, GT and range-topping R-Line – and every model features Post-Collision Braking System, Driver Alert System, mis-fuelling prevention device and keyless start as standard. Engines offer exceptional economy and low emissions twinned with great performance, thanks to the incorporation of Volkswagen’s BlueMotion Technology modifications, including Start/Stop and battery regeneration systems.

The SE Business trim was designed with the company car driver in mind, featuring as standard Front Assist, Adaptive Cruise Control, Pre-Crash system, Driver Profile Selection, ergoComfort seat and front and rear parking sensors. Standard specification is further boosted by Discover

The new Passat - raising the benchmark for fleets

10

New Passat: official Government fuel consumption figures in mpg (litres per 100km); Urban 44.1 (6.4) – 65.7 (4.3), extra-urban 61.4 (4.6) – 85.6 (3.3), combined 53.3 (5.3) – 76.4 (3.7). CO2 emissions 139 – 95g/km. This information includes the new Passat BlueMotion which will be available to order from June 2015.

Navigation system, 3 years’ Car-Net ‘Guide and Inform’, electric door mirrors, front fog lights and tinted rear glass.

The range will be joined in June by a BlueMotion model predicted to return 78mpg on the combined cycle, with CO2 emissions estimated at 95g/km for the saloon and 96g/km for the Estate. An Alltrack version will feature in the Estate line-up from July, bringing extra styling, off-road functionality and four-wheel drive; while a GTE plug-in hybrid model joins the range later in 2015. Combining a 1.4-litre 156PS TSI petrol engine and 15PS electric motor, the Passat GTE offers performance and economy; NEDC consumption (for hybrids) is over 141mpg with CO2 emissions lower than 45g/km.

Example 1 Example 2

12

Employer-provided fuel for private mileage

Employees pay BIK tax on fuel for private use paid for by their employer, while their employer must pay Class 1A NIC on the taxable scale charge. The charge is linked to a set figure, known as the fuel benefit charge multiplier. In 2015/16 the figure is £22,100, up from £21,700. This will increase by the rate of inflation in 2016/17. A separate figure applies for vans (see pages 14/15).

2015/16: Calculating your ‘free’ fuel liabilityTo calculate an employee’s BIK liability, you need to know:– Combined fuel consumption cycle of your company car and price of fuel used– The car’s CO2 emissions and the linked BIK tax percentage– The marginal tax rate of the driver (20%, 40% or 45%)– The Government’s fuel benefit charge multiplier (£22,100)

Mileage reimbursement rates

HM Revenue and Customs’ Approved

Mileage Allowance Payments (AMAPs)

set tax and National Insurance-exempted

rates for business mileage in a private car.

For 2015/16, the rate of reclaim for the

first 10,000 miles remains at 45p per

mile and 25p per mile thereafter.

For the purposes of AMAPs, electric and

hybrid cars are treated in the same way

as petrol and diesel cars.

If the AMAP rate paid to an employee

exceeds the approved amount for the

tax year, then:

– For company directors or employees

earning £8,500 or more per year, the

excess amount should be reported on

form P11D for tax purposes.

– For employees earning less

than £8,500, there is no reporting

requirement as no tax is payable.

– Regardless of an employee’s earnings,

the employer has no tax to pay to HMRC.

If the AMAP rate paid to an employee

is below the approved amount for the

tax year, the employer has no reporting

requirements or tax to pay to HMRC.

However, the employee will be able

to obtain tax relief (called Mileage

Allowance Relief) on the unused balance

of the approved amount.

In addition to claiming AMAP rates, an

allowance for passengers (employees and

volunteers) at 5p per mile can also be

paid tax and is National Insurance-free.

All cars 45p 25p

Up to 10,000 miles Over 10,000 miles

AMAP rates 2015/16

13

Example 1 – the driver’s view

To calculate the annual cost of providing fuel for private use employers must know: cost of fuel, VAT rate, VAT fuel scale charge linked to CO2, Class 1A NIC rate, corporation tax rate.

Fuel cost (10,000 private miles at £1.18 per litre): £760.00

VAT recovery at 20%: (£127.00)VAT fuel scale charge: £89.33Class 1A NIC: £579.46Total: £1,301.79Corporation tax at 20%: (£260.36)

Net annual cost to company of providing ‘free’ fuel: £1,041.43

Polo: official government fuel consumption

figures in mpg (litres per 100km); Urban 37.2

(7.6) – 70.6 (4.0), extra-urban 55.4 – (5.1) – 91.1

(3.1), combined 47.1 (6.0) – 83.1 (3.4).

CO2 emissions 139 – 88g/km.

This information is based on 2015 Model Year.

Volkswagen Passat SE Business 2.0 TDI 150PS BMT 6-speed manualCO2 emissions: 106g/kmFuel economy: 70.6mpgBIK tax: 19% (2015/16)

Taxable value (fuel benefit charge multiplier x BIK): £22,100 x 19% = £4,199

Tax charge for a 20% taxpayer: £840 (worth 712 litres of diesel)Breakeven is 11,057 private miles

Tax charge for a 40% taxpayer: £1,680 (worth 1,424 litres of diesel)Breakeven is 22,115 private miles

Example 2 – the employer’s view

14 15

Commercial vehicles 2015/16

Company light commercial vehicles used privately incur BIK tax for the driver, based on a taxable value of £3,150 in 2015/16. The charge will increase by the rate of inflation in 2016/17. However, the Government has ended the BIK tax exemption status of electric vans from 2015/16, but the full van benefit charge will not apply until 2020/21.

The Government has confirmed its Budget 2014 announcement that the charge will be phased in – 20% of the rate paid by conventionally-fuelled vans in 2015/16, followed by 40% in 2016/17, 60% in 2017/18, 80% in 2018/19 rising to 90% in 2019/20, with the rates equalised in 2020/21, when there will be a single benefit charge applying to all vans.

The Government says it will review van benefit charge support for zero-emission vans in light of market developments at Budget 2016.

If free fuel is also provided by the employer for private mileage, an additional van fuel benefit charge applies. The charge for 2015/16 has increased from £581 to £594. It increases by the rate of inflation in 2016/17.

Class 1A NIC - vansEmployer Class 1A NIC for vans are calculated by multiplying the taxable values

by 13.8%.

Capital allowances/lease rental restrictionsBusiness expenditure on vans (ex-VAT) qualifies for tax relief as capital

allowances at the rate of 18% a year on a reducing balance basis. There is no

balancing charge when a van is sold. The enhanced capital allowance (100%)

for zero-emission goods vehicles applies to March 31, 2018, but availability is

limited to businesses that do not claim the Government’s plug-in van grant.

Lease rental restrictions do not apply to vans.

VED - vans registered on or after March 1, 2001– There is no change to rates in 2015/16 from 2014/15

– Early Euro 4 emission and Euro 5 compliant vans: £140

– All other vans: £225

For more information on the Volkswagen

Commercial Vehicle range telephone 0800 808 9998

or visit www.volkswagen-vans.co.uk

The explanations and data set out in

this guide are for general information

only and, though given in good faith,

are given without any warranty as to

their accuracy. Please refer to your

legal or tax adviser for individual

professional advice. All information

correct at date of publication, May

2015.

Fuel consumption figures shown

are mpg/ltr per 100 km for the

urban, extra-urban and combined

fuel cycles in accordance with EU

Directive 99/94.

For more information on the Volkswagen passenger car range or to request a test drive, call the Fleet Business Centre on 0800 0093 397 or visit www.volkswagen.co.uk/fleet For the latest news from Volkswagen Fleet follow us on Twitter, @VWUKFleet

Crafter range: official government fuel

consumption figures in mpg (litres per

100km); urban 26.2 (10.8) – 35.3 (8.0);

extra urban 35.8 (7.9) – 42.8 (6.6);

combined 31.7 (8.9) – 39.8 (7.1).

CO2 emissions 234-187g/km.

Produced in association with

Volkswagen Company Car and Van Tax Guide 2015/2016.