Stratford-upon-Avon: 14th March 2013 Fleet News – Fleet200 The 2013/14 tax year for fleets Dan Rees Senior Manager Deloitte Car Consulting www.deloitte.co.uk/carconsulting Stratford-upon-Avon: 14th March 2013

The 2013/14 tax year for fleets Contents Timeline of changes CO2 thresholds reduce for corporation tax Impact of threshold changes on purchasing cost Potential impact of threshold changes on lease cost CO2 threshold changes summary An eye on Europe Cost savings – quick wins Deloitte Car Consulting

The 2013/14 tax year for fleets Timeline of changes 2012/13 2013/14 2014/15 2015/16 & 2016/17 Company car tax Removal of the 10% CCT rate for cars with CO2 emissions of 120g/km or less Lower threshold rate of CCT (10%) (1) set to apply to cars with CO2 emissions of 76-94g/km Lower threshold rate of CCT (11%) (1) set to apply to cars with CO2 emissions of 76-94g/km (1) CCT rate of 0% of list price of electric cars to end on 5 April 2015. Previous rate of 9% reemployed   Extension of the graduated CCT bands based on CO2 emissions down to 95g/km CCT to increase by two percentage points, to a maximum of 37 per cent in both 2015–16 and 2016–17  New lower threshold rate of CCT (10%) (1) set to apply to cars with CO2 emissions of 76-99g/km 3% diesel supplement abolished from 2016/17 onwards  Private fuel benefit Increase in the private fuel benefit multiplier to £20,200 Increase in the private fuel benefit multiplier to £21,100  Corporation tax Reduction in the main rate of corporation tax from 26% to 24% Reduction in the main rate of corporation tax from 24% to 23% Reduction in the main rate of corporation tax from 23% to 22% End of first year allowances for low emission cars (95g/km or less)     Reduction in the writing down allowances for the main and special rate pools for capital allowances from 20% to 18% and 10% to 8% respectively Reduction in threshold CO2 level between main and special rate pools for capital allowances from 160g/km to 130g/km  100% first year capital allowances extended until March 2015 Reduction in lease rental restriction threshold from 160g/km to 130g/km   Reduction in the threshold for 100% first year allowances from 110g/km to 95g/km  No first year capital allowances available for car leasing business  (1) - Subject to the 3% diesel surcharge / changes announced in the 2012 Budget  Deloitte Car Consulting

15% lease rental restriction 15% lease rental restriction The 2013/14 tax year for fleets CO2 thresholds reduce for corporation tax Pre 1 April 2013 Emissions Post 1 April 2013 8% allowance 15% lease rental restriction 8% allowance 15% lease rental restriction 160g/km 18% allowance 130g/km 110g/km 18% allowance 95g/km 100% first year allowance 100% first year allowance Deloitte Car Consulting

The 2013/14 tax year for fleets Impact of threshold changes on purchasing cost Deloitte Car Consulting

The 2013/14 tax year for fleets Potential impact of threshold changes on leasing cost Deloitte Car Consulting

The 2013/14 tax year for fleets CO2 threshold changes summary 96-110g/km CO2 emitting cars Purchasing: 100% first year allowance turns to an 18% annual allowance - cost increase Leasing: Expect lessor to raise lease rental to cover increased cost of ownership 131-160g/km CO2 emitting cars Purchasing: 18% annual allowance turns to an 8% annual allowance – cost increase Lease rental restriction of 15% kicks in – cost increase Deloitte Car Consulting

The 2013/14 tax year for fleets An eye on Europe We are seeing VAT judgements on cases presented at the CJEU have implications on VAT in the UK, particularly in the automotive space VAT CJEU EON Asset Finance lease is supply of services (in UK) Title doesn’t pass at outset VAT payable on each instalment 50% block in operation (lease) CJEU considers supply of goods, as risk and rewards with lessee (not title) VAT chargeable in full at outset VAT 100% blocked HMRC agrees with Deloitte’s view that this is not correct, but interim view only 50% restriction on lease rental Apply for derogation from Europe every few years to apply flat 50% VAT recovery Current one expires 31 December 2013 Restriction reflects element of private use Commission requires report reviewing / explaining percentage (1 April 2013) BGZ European motor vehicle supplier supplying cars on lease plus motor insurance CJEU deemed two separate supplies IPT applicable to motor insurance Important to check contracts to check IPT treatment correct Deloitte Car Consulting

The 2013/14 tax year for fleets Cost savings – quick wins SMART MILES FUEL Where? Cash allowances paid Business mileage undertaken Mileage reimbursed at less than AMAP How? Takes advantage of tax/NI free AMAP rates Web system to produce payroll adjustment file every month based on mileage levels How much? Savings of £300-£600 per annum per driver (more business mileage, more savings) Where? Fuel cards provided Fuel benefit arises (none or partial mileage capture) How? Removes fuel benefit and increases cash flow Web system to produce payroll adjustment file once a year, or every month How much? Savings of ~£1,000 per annum per driver on average Deloitte Car Consulting

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