- Budget 2014 announces new BIK changes for 2017/18/19
- Increases for low emissions vehicles will be a significant hit for many
- What you choose now could have big effect in your future monthly bills
We didn’t have to wait until the budget was announced to know what was going to change immediately for company car drivers – those figures have been in the public domain since before the last budget.
In essence the 2014/15 rates have seen a hike of one percent over last year (as long as your car doesn’t emit less than 76k/km of CO2) and so if you drive a BMW 518d with 119g/km CO2 emissions last year’s bill of 18 percent BIK jumps to 19 percent. That means monthly payments on that car will increase from £191 to £201 for higher rate tax payers.
Looking further into the future, which is important for those lucky enough to be selecting their new wheels now (as it may have to last you well into the 2017/18 tax year), there’s another shift afoot.
In fact by 2017/18 the sliding scale will have moved on four percentage points from where it sits now, and six percentage points in 2018/19.
That means if you’re looking at a car, such as the Ford C-Max 1.0T Ecoboost, which sits in the 16 percent BIK tax band currently, by 2017/18 that will have increased to 22 percent. Quite a leap, with monthly costs taking the hit.
Currently a low emissions car that sits in the 1-75g/km CO2 output is only charged at five percent, but by 2015/16 that changes again, and the banding is split into two.
Emit more than 50g/km of CO2 (but less than 76g/km) and that’ll leave you with a nine percent BIK bill for 2015/16 which increases to 11 percent the year after and 13 percent for 2017/18. By 2018/19 that’ll hit the lofty heights of 16 percent.
And while 2015/16 rates will see those cars that emit less than 50g/km pay a reasonable five percent BIK bill, it follows the suit of its 51-75g/km banding brother and becomes seven percent in 2016/17, followed by nine percent the year later and 13 percent in 2018/19. Basically, what’s green, clean and mean with its monthly bills now may not be quite so appealing in two, three or even five years.
Whatever you do, pay careful attention to what car you choose now so as not to be stung by future BIK rate increases announced in today's budget.
For a full explanation about Company Car Tax see here.
And find the Parkers Company Car Tax Calculator here.
See below for a full breakdown of the future BIK rates
|% of P11D||2014/15||2015/16||2016/17||2017/18||2018/19|
|Price||CO2 (g/km)||CO2 (g/km)||CO2 (g/km)||CO2 (g/km)||CO2 (g/km)|