UK Budget 2015: changes affecting business fleets

The Chancellor of the Exchequer delivered the 2015 Budget to Parliament on 18 March this year.

The 2015 Budget may only have a handful of changes which affect business fleets but these seemingly small shifts could change the way companies and organisations choose their vehicles in the coming years. We’ll look at this year’s announcements to give you a clear view of your fleet’s future.

Budget 2015 Automotive Highlights

2019/20 company car benefit in kind (BIK) tax rates announced to increase by 3 percentage points (including Ultra Low Emission Vehicles)

The fuel duty increase of 0.54 pence per litre planned for 1 September 2015 has been cancelled

2015/16 vehicle tax rates (also called Vehicle Excise Duty) will increase in line with inflation

What do these announcements mean for car fleets?

It’s nothing new; low CO2 vehicles fall in line with the Government’s big plan to reduce the UK’s carbon footprint so they continue to get the tax advantages. Gas-guzzlers on the other hand are strongly discouraged with chart-topping 37% BIK rates and high vehicle tax.

BIK Rates

2019/20 BIK rates will follow the upwards trend and increase by 3 percentage points.

High BIK rates can act like a company car scheme deterrent for drivers. One solution would be to go for Ultra Low Emission Vehicles; ULEVs produce less than 76g of CO2 per kilometre and have the lowest BIK rates, between 5-12% in 2015/16.

Let’s not kid ourselves, even ULEV company car tax rates will increase year-on-year from 2015 but they’ll never-the-less still offer the lowest tax bills for employees and the lowest Employers National Insurance (ENI) rates for businesses.

A word of caution though - ULEVs typically have high rental costs. Swings and roundabouts…

Fuel Duty Freeze

With fuel being one of the largest fleet expenses to contend with, the fuel duty freeze is certainly welcomed. (Although many were riled by the Chancellor’s statement that “It saves a family around £10 every time they fill up”, where “It” actually refers to the government’s actions from 2011 to the end of 2015/16; not this Budget’s influence.)

Vehicle Tax Increase

vehicle tax inflation increases in 2015/16 are very slight so not much of note there.

You’ll still get a £10 “alternative fuel” discount if you choose to shun petrol and diesel… small pleasures!

2015/16 vehicle tax rates table >>

What now?

Like all things in business, fleet legislation is constantly in flux. Unless your business decides on an all-electric car fleet with 0% CO2, your vehicle choices and fleet policies will need frequent attention if you don’t want to end up out of date and out of pocket.

With a typical car lease lasting 3 years, your vehicle choices now will impact your tax bill in 2017. Now, you could research each of the 9,000+ car makes, models and variants to compare their CO2 emissions against vehicle tax rates then assess the tax implications and cross-check specifications but who’s got time for that?! Well, we do. And we have the experts who can manipulate that fleet data to advise you on which cars meet your business’ needs and lower your fleet’s running costs.

That’s why Covase exists – to be your eyes and ears and keep your business fleet economical and safe today and in years to come.

Don’t be afraid to pick up that phone and talk to us about your 2015 fleet - we’re a very friendly bunch! You’ll catch us on 0345 369 7100.

Want the nitty gritty tax details?

We've put together two no-fuss online resources - one for the latest announcements on company car BIK rates and one for 2015 vehicle tax changes so that your tax information hunt remains headache-free. We've summarised how the 2015 Budget changes affect vehicle running costs, fleet/car scheme policies and fuel preferences, now and in the future.

Company car tax changes timeline and BIK rate table >>

2015/16 vehicle tax rates table >>