Company cars and fuel (Table C)
The complications of owning a company car continue, made harder to follow by the fact that the changes coming into force now were announced several years ago, and the current Budget includes rate changes for 2019/20.
The tax charge on the benefit of a company car continues to be based on a percentage related to the CO2 emissions rating of the car, applied to the 'list price' of the vehicle. For 2015/16, new bands of 0 – 50g/km (5%) and 51 – 75g/km (9%) are introduced, and the highest emitting cars have a new maximum percentage of 37%.
Further increases have been published going forward into 2019/20, so anyone choosing a new company car now can work out the tax effect of a current decision until they are likely to change it. By 2018/19, a car emitting 0 to 50g/km will be taxed on 13% of the list price, and one emitting 180g/km or more will be taxed on 37%.
Zero-emission vans will be subject to a tax charge in 2015/16 – 20% of the normal van rate of £3,150. This will rise in stages each year until there is a single tax charge for all vans available for private use in 2020/21.
The taxable benefit of free fuel provided for use in a company car is calculated by multiplying the emissions-based percentage by a fixed figure. This goes up to £22,100 for 2015/16 (2014/15: £21,700), so for many employees the taxable amount for fuel will increase for two separate reasons – the percentage and the amount.
|The taxable benefits are increasing – think carefully when you change your company car|
Simplified benefit reporting
As announced in the Autumn Statement, there will be a new statutory exemption from 6 April 2015 for qualifying 'trivial benefits' provided by an employer. These are subject to a value cap of £50 on any individual benefit; officers of a closely-controlled company will also be subject to an overall limit of £300 in value of trivial benefits in a year. Previously such benefits had to be reported and were generally taxable unless covered by a specific exemption or an agreement with HMRC.
Other changes to the taxation and reporting of expenses, including reducing the number of situations in which a formal dispensation is needed to avoid filing annual P11D forms for reimbursed expenses, will come in April 2016.
HMRC has been concerned for some years with 'disguised employment' through intermediaries such as 'umbrella companies' or personal service companies, as this can reduce an individual’s tax and NIC liabilities. There are a number of rules to counteract such avoidance, but the Government intends to consult further to restrict relief for travel and subsistence expenses where the intermediary structure appears to generate a tax deduction that would not be available to someone who was directly employed by the end user. Any changes will take effect from 6 April 2016.