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Spring Statement 2018

Spring Statement 2018


Ford Budget Guide, March 2018


The Government’s Budget Statement on March 13th 2018 confirmed the significant changes to company car tax and Vehicle Excise Duty for diesel cars, announced in the November 22nd 2017 Budget. The 3% Benefit-in-Kind diesel tax charge rises by 1% rise to 4% from April 6th 2018 for all diesel cars that do not comply with the Real Driving Emissions Step 2 (RDE2) standard. There are also increases in First Year Vehicle Excise Duty (VED) – effectively a one VED band rise – for new non RDE2-compliant diesels first registered from April 1st 2018.

The steady increase in BIK tax percentages over the past two years, based on a car's emissions of CO2, has eroded the BIK tax advantages of operating ultra-low emitting vehicles (typically with sub 50g/km CO2 emissions).

From April 6th 2018, for example, the driver of an Ultra Low Emitting Vehicle (ULEV), defined as a petrol, electric or hybrid electric vehicle with CO2 emissions of 0-50g/km, will face BIK tax liability based on 13% of P11D price, up from 9% in 2017-18, with that percentage rising to 16% in 2019-20. That compares with a BIK percentage of just 5% for the same vehicle in 2014-15, and total exemption from BIK tax for cars with zero emissions.

So now, more than ever, fleet vehicle choice - and, more importantly, fuel selection - is a key factor in determining a choice list for your fleet.

This Ford Fleet Budget Guide provides an update to the main announcements made in the November 2017 Budget, with guidance on the main changes applicable from April 2018, and provides insight into making the right fleet management decisions for the future.

  • The impending Budget changes continue to highlight the importance of choosing cars with low CO2 emissions – the only way to reduce tax liabilities for both company car drivers and fleet decision makers. Ford Fleet offers advanced engine technologies which include a broad spectrum of low-emission petrol, diesel and hybrid models designed to fill every need, from city cars through to SUVs and light commercial vehicles that provide attractive and cost-effective solutions to your fleet requirements.

    Vehicle Excise Duty (VED):

    Increased first year rates of VED for new diesel cars that do not meet the Real Driving Emissions Step 2 (RDE2) standard come into force on April 1st 2018. An RPI-linked rise in VED for cars already registered at March 31st 2017 also applies from the same date.

    Company car tax (CCT) bands:

    The diesel Benefit-in-Kind tax charge rises from 3% to 4% for diesel cars that do not meet the Real Driving Emissions Step 2 (RDE2) standard, applicable from April 6th 2018.

    Capital allowances and lease rental restriction:

    From April 1st 2018, the CO2 emissions threshold for main rate capital allowances for new car purchases falls from 130g/km to 110g/km. On the same date, the 100% first-year allowance threshold reduces from 75g/km to 50g/km, applicable until March 31st 2021.

    Fuel benefit charge (FBC):

    The fuel benefit charge (FBC) used to calculate the tax due on employer-provided fuel for private is set at £23,400 from April 6th 2018, rising from £22,600 in 2017-18. For vans, the benefit charge for fuel provided for private use rises from £610 to £633 on the same date.

    Van benefit charge (VBC):

    For conventionally fuelled light commercial vehicles, including ‘Double-Cab’ pick up trucks, the VBC is set at £3,350 in 2018-19, or £3,983 if the employer also provides fuel for private mileage

    Van benefit charge (VBC) for zero-emission vans:

    VBC is supported on a tapered basis until 2020. In 2018-19 the VBC rate paid by electric vans is 80% of the rate paid by conventionally fuelled vans (£3,350). On April 6th 2019, the rate rises to 90% in 2019/20, with the rates equalised in 2020.

    Vehicle Excise Duty for vans:

    Retail Price Index-linked rises in VED for vans come into force on April 1st 2018, with the new rates shown in the PDF available to download from this page.

    Fuel duty:

    Road fuel duty rates remain unchanged from 2017-18 levels in 2018-19.

    ULEVs and electric vehicle charging infrastructure:

    The November 2017 Budget announced a new £400m charging infrastructure fund, investment of an extra £100 million in the Plug-in-Car Grant (PiCG) and £40 million in extra funding for research and development into charging technologies.

  • The key changes announced in the Budget, and coming into force from April 2018, mean careful planning is needed to ensure cost-effectiveness for fleets.

    Although new BIK tax and VED rules from April penalise diesels, with higher BIK tax charges for drivers and increased first-year VED rates from April 2018, running cost analysis shows that diesel still has a major part to play in modern fleet operations, particularly for high-mileage fleets where reliable fuel cost forecasts are an essential part of planning.

    The increasing popularity of hybrids – and particularly plug-in hybrids (PHEVs), where low CO2 emissions play a key role in reducing drivers' BIK tax liabilities ­– has required increasingly careful analysis by fleet operators, where actual fuel consumption returns in everyday driving have often fallen short of expectation and can result in higher than expected fuel costs. While PHEVs undoubtedly have a major role to play in improving air quality, particularly in urban areas, they are often less cost-effective for employers. This is especially pertinent when covering large mileages owing to; unpredictable fuel consumption patterns, a heavy reliance on appropriate driver behavior and the existence of the necessary charging infrastructure.

    Fleet managers should also be mindful that recharging infrastructure is still limited nationwide, resulting in drivers becoming more reliant on the car's combustion engine, hence increasing fuel consumption further, or even declining to recharge the car at all.

    New registrations of petrol cars have surged on widespread reports of increasing pollution and declining air quality attributed to diesel, particularly in urban areas. SMMT figures* record an overall market share of 60.6% for petrol in 2018 compared with 51.5% for the same period in 2017, while diesel cars have declined by 23.5% over the same period, although still with a 35.0% share in February 2018.

    So, whilst potential concerns around diesel are understandable, Fleet operators should also pay attention to fuel consumption and fleet CO2 figures. In different operating cycles, analysis using KwikCarCost whole-life cost figures and data shows diesel still offers important advantages in fleet, in spite of the new legislation.

    Our analysis and summaries below show strong cases for all three fuels - petrol, diesel and hybrid - with advantages and disadvantages for each fuel type that require careful consideration, with detailed data analysis shown in the table below:

    *SMMT, February 2018

  • Download the PDF at the bottom of the page for an analysis of BIK tax advantages for drivers selecting the Mondeo Hybrid, owing to the CO2 emissions courtesy of the sophisticated self-charging hybrid engine. When combined with competitive pricing through Ford Credit, the Mondeo Titanium Edition Hybrid offers a competitive option for any fleet operator.


  • Advantages, disadvantages and a summary for each fuel type are shown below.


    E.g. Ford Mondeo Titanium Edition 1.5T EcoBoost 160PS 5dr 6sp manual


    • Generally lower capital cost than diesel or hybrid models
    • Generally lower fuel cost per litre than diesel, though costs may be offset by generally higher fuel consumption
    • Perceived to be 'cleaner' in operation than diesels
    • Lower first-year VED cost than diesel under new 2018-19 rules, although can be offset by higher emissions of CO2, on which VED is based


    • CO2 emissions and fuel consumption generally higher than for equivalent diesels leading to higher fuel costs particularly for higher mileage fleets
    • BIK tax liabilities for drivers potentially higher as a result of higher CO2 emissions, though may be offset by lower capital cost,


    • Suited to lower mileage fleets operating nationwide and in urban areas in some circumstances
    • Generally suited to small-medium cars (e.g. Ford Fiesta, Focus, Mondeo) where lower capital cost is perhaps a priority


    E.g. Ford Mondeo Titanium Edition 2.0 TDCi 150PS 5dr 6sp manual


    • Typically improved fuel consumption and reduced CO2 emissions compared with petrol equivalents
    • Fuel consumption and emissions advantages compared with petrol particularly apparent in larger luxury vehicles and SUVs
    • Improved 'driveability' compared with petrol, with strong low-down engine performance and flexibility
    • Potentially lower service, maintenance and repair (SMR) costs with no ignition system and longer service intervals


    • Widespread reporting of diesels being a major contributor to 'local' pollutants such as NOx and exhaust particulates, although highly developed emissions technologies such as particulate filters, exhaust gas recirculation and greater engine efficiency on newer diesels counter many claims
    • Generally higher cost of fuel per litre, although offset by significantly lower fuel consumption in most cases
    • Generally higher capital cost of diesel vehicles potentially leads to higher driver BIK tax liabilities, especially with new 4% BIK tax charge over petrol in 2018-19, although may be offset by lower CO2 emissions, on which BIK tax is based
    • Higher first year VED rates in 2018-19 - the so-called 'showroom tax' - for diesels, although rates are standardised with petrol from year two on


    • Suited to higher mileage fleets operating nationwide, where maximum fuel efficiency is a priority
    • More suited to larger luxury vehicles and SUVs on account of improved efficiency and fuel consumption compared with petrol
    • Urban air quality concerns have put the spotlight on diesel, perhaps making it less suited to city use
    • Less suited to urban-based fleets with low annual mileages, where higher capital cost may not be offset by reduced fuel costs over larger mileages
    • Low-down flexibility and robust pulling power make it ideally suited to towing

    Hybrid Electric Vehicle (HEV)

    E.g. Ford Mondeo Titanium Edition 2.0 TiVCT Hybrid Electric 4dr 6sp auto


    • Self-charging hybrid system does not require plugging in to re-charge – ensuring advantages of hybrid technology at all times
    • As a result of not being a Plug-in Hybrid, Mondeo Hybrid avoids the potential pitfalls of a Plug-in Hybrid vehicle (e.g. limited charging network and requirement for work-based recharge points)
    • Potential for reduced fuel costs based on official fuel consumption figures
    • Lower BIK tax banding than petrol or diesel models, based on official CO2 emissions figures, gives potential for reduced drivers' BIK tax liability
    • No different to drive from conventional car, and combined combustion/electric motors potentially provide enhanced power and performance
    • 100% first year capital allowance for Ultra Low Emitting Vehicles (ULEV) with CO2 emissions of 50g/km or less, with an 18% annual capital allowance for cars with CO2 emissions of 110g/km or less


    • Potentially higher capital cost than equivalent petrol or diesel models
    • Potentially higher depreciation than equivalent petrol or diesel models
    • Due to hybrid system requiring a change in driving style, actual fuel consumption returns may require additional driver training


    • Reduced emissions make hybrid models highly suited to fleets with urban-based operating cycles
    • Benefits drivers looking for lower BIK tax liabilities
    • Employers benefit from enhanced 'green' credentials if fleet commits to hybrid power
  • BIK – Benefit in Kind - a tax levied on employees who receive perks in addition to their salary as part of their remuneration package.

    CO2Carbon Dioxide - when fuels such as petrol and diesel are burned in the engine, carbon dioxide (CO2) is produced and released into the atmosphere.

    NOx - refers to nitrogen oxides or oxides of nitrogen that form when fuels are burned at high temperatures, as in the engine combustion process.

    PHEV – Plug-in Hybrid Electric Vehicle - a hybrid electric vehicle which can be recharged by plugging it in to an external source of electric power as well as generating electric power on the move via a generator.

    RDE – Real Driving Emissions - refers to the emissions that a vehicle produces on the road while following a set procedure, rather than in a laboratory environment.

    SMR – Service, Maintenance and Repair - Service, maintenance and repair (SMR) costs are one of the key influencers in compiling total cost of ownership figures, which is the key barometer for vehicle selection.

    ULEV – Ultra-Low Emission Vehicle – electric or part-electric cars that emit 75g/km of CO2 or less.

    VED – Vehicle Excise Duty (also known as "vehicle tax") - is a tax that is levied as an excise duty and which must be paid for most types of vehicles which are to be used on public roads in the UK.

To review this year’s Chancellor’s Spring Statement, which was announced on 13th March 2018, please see our overview below:

Read the Ford Fleet 2018 Spring Statement Guide (PDF 659KB)

The explanations and data are provided for general information only. Though given in good faith, the information is provided without any warranty as to its accuracy. Please refer to your legal or tax advisor for individual professional advice. All information was originally compiled on 13th March 2018.



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