UK Government Budget 2012

by Fuggles
6 years ago

The UK Government Budget announcement on 21 March 2012 made a lot of changes to the UK tax and spend.  But what changes does that mean for the car user as a result of the decisions by the Committee of Ways and Means?

The 3.02p per litre fuel duty increase (plus VAT) scheduled for August 1, 2012 will go ahead.  Average UK fuel prices are currently at a record 139.95p per litre of unleaded petrol and 146.54p per litre of diesel.

On April 1, 2012, Vehicle Excise Duty rates will increase in line with the RPI, apart from VED rates for Heavy Goods Vehicles which will be frozen in 2012–13.  The Table below shows what that means in real terms:

CO2 emissions
First year rate* Standard
A Up to 100 0 0
B 101-110 0 20
C 111-120 0 30
D 121-130 0 100
E 131-140 120 120
F 141-150 135 135
G 151-165 170 170
H 166-175 275 195
I 176-185 325 215
J 186-200 460 250
K** 201-225 600 270
L 226-255 815 460
M Over 255 1,030 475

In addition the Government has already announced major changes in company car tax with the abolition from April 6 of the so-called Qualifying Low Emission Car (QUALEC) category.  It means that the lower end of the system has been revised, which will see the scale charges ranging from 10% to 35% (see table below) instead of 15% to 35%.

Drivers of company cars with a zero CO2 rating – electric cars – will continue to benefit from a 0% benefit-in-kind tax charge; while the 1-75g/km tax threshold remains at 5%; and the 76-99 g/km threshold at 10%. There also remains in place for 2012/13 a 3% tax surcharge for drivers of diesel cars.  However, while company car benefit-in-kind tax changes were also already known for the 2013/14 financial year, the Budget documents have revealed significant changes for the following three financial years – 2014/15, 2015/16 and 2016/17.

The changes are as follows:

  • The appropriate percentage of list price subject to tax will increase by one percentage point for cars emitting more than 75 g/km of carbon dioxide, to a maximum of 35% in 2014/15, and by two percentage points, to a maximum of 37% in both 2015/16 and 2016/17 (see chart below).
  • From April 2015, the five-year exemption for zero carbon and ultra low carbon emission vehicles will come to an end. The appropriate percentage for zero emission and low carbon vehicles will be 13% from April 2015 and will increase by two percentage points in 2016/17. The Budget papers made no specific mention of the separate tax treatment of zero emission electric cars referring only to ‘petrol fuelled cars’ and ‘diesel fuelled cars’ for tax years 2015/16 and 2016/17.
  • From April 2016, the Government will remove the 3% diesel supplement differential so that diesel cars will be subject to the same level of tax as petrol cars.
  • The Government will exclude certain security enhancements from being treated as accessories for the purpose of calculating the cash equivalent of the benefit on company cars made available for private use. The changes take effect retrospectively from April 6, 2011.

Employees who are in receipt of company-funded fuel used privately will see their benefit-in-kind tax bills rise from April 6.  The Chancellor announced in the Budget that the FBC multiplier for company cars will increase from £18,800 to £20,200, and will increase by 2% above the RPI in 2013/14. The Government also committed to pre-announcing the FBC multiplier one year ahead.

The budget was in line with most analyst expectations  For GTROC members that just means paying more to do the things we love!  Other plans, not part of the budget such as more toll charge roads has already been covered by a separate article on this site