- BIK rate changes come into force in April
- Fuel Duty could be frozen or even cut
- Higher rate income tax change could affect more than before
The government is facing an even tougher challenge to balance the books and that means there could be more changes that affect company car drivers.
However, with so little room for manoeuvre George Osborne’s Budget announcement due on March 20th could be something of an empty affair.
What's already changing for company car drivers
There was a major annoucement in the 2012 Budget about the changes to the BIK band structure that starts on April 1 2013. This is key as it affects the amount of company car tax an employee will pay on their car.
With cars becoming ever cleaner and more efficient, the shift in bandings means cars like the BMW 320d that emit 119g/km of CO2 will change from a 14% BIK rating to 15%.
And while that climb won’t exactly break the bank this year, the continuing trend for increased BIK taxation across the board means by 2016/2017 the BMW will sit in a 20% banding.
Another announcement expected from Osborne is the change in earnings required to qualify for the higher rate tax band.
Previously employees would have needed to achieve a salary of £42,475 to be in the 40 percent taxation banding, but that is set to drop to £41,450.
With a typical BMW 320d as your company car, that means if you’re already on the cusp of this higher rate, then next year you could lose another £77 from your monthly pay packet.
However there will also be an increase in the un-taxed earnings threshold, from £8,105 to £9,205 which should offset some of the monthly financial pain. By 2015 the Government hopes to raise this further to £10,000 – something it outlined in its original manifesto.
What changes could take place in the 2013 Budget
We’re getting used to fuel prices rising but 2013 has been a particularly bad year for those paying for their own fuel; in the last month diesel prices have risen by 5 pence per litre to a UK average of 144.8ppl.
An average 70-litre tank now costs over £101 to fill. Osborne has already told Tory MPs “I hear you on fuel duty” though and it’s expected there will be a freeze on fuel duty, if not a small cut.
However if an electric car is a viable option for your working life there may be some light at the end of the tunnel.
The Government has just announced that it will subsidise electric car charging points by 75 percent, taking £37.5 million out of the £400 million £5,000 electric car grant.
It’s only for private buyers at the moment, but with the Government’s push of electric vehicles we wouldn’t be surprised if it filters down to businesses as well.
Regardless of this though, the forthcoming 2013 Budget proves that choosing your latest company car wisely has never been as important as it is now.