|
Track-back: Manager | Dashboard
Budget Update - March 2008
Chancellor Alistair Darling delivered this
year’s Budget speech on 12 March.
What are the implications of this year’s budget for fleets and company car
drivers?
Vehicle Excise Duty
Six new bands to be introduced from April 2009 (making
13 bands in total), providing a more granulated link to CO2 than at present. Up
to 100g/km remains at £Nil, with the charge for vehicles with emissions over
255g/km increasing from £400 (2008/9) to £440 (2009/10).
A new first year charge to be introduced for new
registrations from April 2010. The charge increases more steeply for vehicles
with emissions >160g/km, up to £950 for the highest group. Second and subsequent
years revert to standard VED charge.
The first year charge had been muted and reflects the
Government’s intention to influence vehicle choice in relation to higher CO2
emitting cars. There might be a rush to register higher emitting cars before
April 2010.
Capital Allowances (Business Cars)
Writing down allowances (WDAs) to be based on emissions
from April 2009. Cars with CO2 emissions above 160g/km will attract 10% WDA,
whilst cars with emissions of 160g/km and below will attract 20% WDA.
This effectively creates two “pools” for tax purposes
and replaces the current approach of individual tax calculations for expensive
cars of £12,000 or more. The new rules apply to new cars from April 2009.
The impact for cars costing over £12,000 is to delay the
recovery of capital allowances, due to the “pooled” approach, which will lead to
a tax timing disadvantage for organisations claiming capital allowances.
Expensive Car Leasing Disallowance
The current disallowance for leased cars costing over
£12,000 will be replaced by a disallowance based on CO2. From April 2009, cars
with CO2 emissions above 160g/km will attract a 15% net disallowance relating to
finance payments. For cars with emissions of 160g/km or below there will be no
disallowance.
This shifts the emphasis on penalising high CO2 emitting
vehicles rather than expensive cars. Funding decisions for expensive cars with
low CO2 emissions may need to be reviewed in the light of this change – this
could result in contact hire becoming more attractive for expensive cars with
low emissions.
AMAP Rates
The Chancellor confirmed that there will be no changes
to the current AMAP rates at 40 pence per mile and 25 pence per mile after
10,000 miles.
Company Car Tax
In line with previous Budgets, the Chancellor provided
advance notice of the base band for company car for tax year 2010/11 at 130g/km.
This is 5g/km lower than for tax year 2009/10 effectively increasing company car
tax at most bands by 1%.
Fuel Duty
Budget 2007 announced fuel duty rates for the next three
years, and in line with this policy the rates for 2010 were announced in this
Budget.
Standard Road Fuels
The Chancellor responded to economic pressure and
postponed the 2 pence per litre fuel duty increase from 1st April 2008 to 1st
October 2008. Subsequent increases were announced with a 1.84 pence per litre
increase due on 1st April 2009 and an increase of 0.5 pence per litre above
indexation on 1st April 2010.
Alternative Fuels
The duty differentials given to biofuels will be
abolished in 2010/11. The intention is that the Renewable Transport Fuels
Obligation will support biofuels.
The RTFO is targeted at ensuring that biofuels remain
cost effective whilst ensuring the fuels are ethically produced and in an
environmentally sensitive way, although there is no detail as to how this will
happen or what the effect will be at the pumps.
Duty rates discounts for Compressed Natural Gas (CNG)
will remain, whilst for Liquid Petroleum Gas (LPG) the discount is to be eroded
by 1%, both taking effect from 1st October 2008. This rate reduction will have
very little effect as LPG vehicles are a very small niche market and in decline.
Road Charging Schemes
The Government announced an invitation to tender for
private sector companies to run a number of projects based on road charging by:
time of day, distance travelled, and route chosen. Significant funds are being
made available.
Van Fuel Benefit
No detail was provided but a statement has been made
that the van fuel benefit will "mirror" that of company cars. Basing van fuel
tax on CO2 has been desired for many years but a lack of van CO2 data has made
this impossible.
A thank you to Lex Vehicle Partners for their assistance.
^ back to top
All of the documents can be obtained from us in a word format, so that they can be personalised and edited to suit your company or business. This service is free of charge, on request or phone 01908 262662.
| 
