Pre-Budget Report signposts changes ahead
09 December 2009
With rises in VAT, National Insurance, BIK taxation and fuel duty, this year's Pre-Budget Report adds further inflationary pressures to fleet expenditure. There were, however, concessions to companies who had an interest in electric vehicles, with the news of a five-year exemption from BIK tax on electric cars from next April.
VAT was signposted to return to 17.5% from January 1 and this was confirmed by the Chancellor Alistair Darling in his Pre-Budget Report, along with a 0.5p increase in National Insurance Contributions from 2011.
Fuel duty is to go up by 1p per litre from April and by the same rate for the next three years, while the cost of providing private fuel for company car drivers also increases from a fuel scale charge of £16,900 currently to £18,000 from April. The van fuel scale charge goes up from £500 to £550 at the same time.
Company car taxation also increases by virtue of 5% graduated reductions in the carbon dioxide thresholds which determine the level of BIK on company cars, beginning in 2012. At the same time, the 10% tax band will be reduced to apply to vehicles emitting up to 99g/km.
The announced incentives included the zero rate of company car tax on electric cars, as drivers of electric cars currently pay 9% tax. They also extend to electric vans, which gain exemption from the van benefit charge for five years and will also receive a 100 per cent first-year allowance.
The Chancellor also said that the Treasury is to invest an extra £30 million on low-carbon transport projects.
Reaction to the electric vehicle concessions centred around the lack of infrastructure to re-charge vehicles, and the suitability of existing models for fleet use.
The AA was amongst organisations which welcomed the news although it voiced its worries about the suitability of the current crop of electric vehicles for fleet use.
Martin Brown, managing director of Fleet Alliance, said: ”Although concessions on electric vehicles are to be welcomed and will hopefully accelerate the move towards carbon neutral vehicles, much of the Report was inflationary.
“The increase in VAT will hit fleet fuel bills from January 1 while many of the others will add to the cost of fleet operation from the spring of next year.”
09 December 2009
With rises in VAT, National Insurance, BIK taxation and fuel duty, this year's Pre-Budget Report adds further inflationary pressures to fleet expenditure. There were, however, concessions to companies who had an interest in electric vehicles, with the news of a five-year exemption from BIK tax on electric cars from next April.
VAT was signposted to return to 17.5% from January 1 and this was confirmed by the Chancellor Alistair Darling in his Pre-Budget Report, along with a 0.5p increase in National Insurance Contributions from 2011.
Fuel duty is to go up by 1p per litre from April and by the same rate for the next three years, while the cost of providing private fuel for company car drivers also increases from a fuel scale charge of £16,900 currently to £18,000 from April. The van fuel scale charge goes up from £500 to £550 at the same time.
Company car taxation also increases by virtue of 5% graduated reductions in the carbon dioxide thresholds which determine the level of BIK on company cars, beginning in 2012. At the same time, the 10% tax band will be reduced to apply to vehicles emitting up to 99g/km.
The announced incentives included the zero rate of company car tax on electric cars, as drivers of electric cars currently pay 9% tax. They also extend to electric vans, which gain exemption from the van benefit charge for five years and will also receive a 100 per cent first-year allowance.
The Chancellor also said that the Treasury is to invest an extra £30 million on low-carbon transport projects.
Reaction to the electric vehicle concessions centred around the lack of infrastructure to re-charge vehicles, and the suitability of existing models for fleet use.
The AA was amongst organisations which welcomed the news although it voiced its worries about the suitability of the current crop of electric vehicles for fleet use.
Martin Brown, managing director of Fleet Alliance, said: ”Although concessions on electric vehicles are to be welcomed and will hopefully accelerate the move towards carbon neutral vehicles, much of the Report was inflationary.
“The increase in VAT will hit fleet fuel bills from January 1 while many of the others will add to the cost of fleet operation from the spring of next year.”
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