Workbench Logo
Workbench Logo
Workbench Logo
Workbench Logo
Workbench Logo

Emergency Budget 2010: the lowdown for fleets

By / 7 years ago / Latest News / No Comments

The main changes in the Budget that will affect fleets are as follows:

VAT rise from 17.5% to 20% from 4 January 2011. The SMMT has calculated that the move will add around £300 to the price of the average new car. This will particularly hit at fleets that purchase their company cars outright, as the VAT cannot be reclaimed for any vehicles that are used for private mileage. To that end, ACFO has already predicted that many outright-purchase fleets will bring their 2011 orders forwards. The VAT rise will also hit at companies leasing vehicles who are currently entitled to recover 50% of the VAT on the leasing charges. The increase will also have an effect on rental rates, according to the BVRLA.

• A reduction in the main rate of capital allowances on plant and machinery, which includes vans and cars, from 20% to 18%, and the special rate from 10% to 8% from April 2012. This will reduce the rates that fleets can claim back and increase the time taken to do so. This is likely to increase the attractiveness of leasing vehicles, according to the BVRLA.

• Insurance Premium Tax to rise to 6% for the standard rate and 20% for the higher rate from 4 January 2011. 

• National Insurance rates to increase by 1% from 6 April 2011 for employers and employees. This was announced in the March Budget by the previous Labour Government and means that employee rates will increase from 11% to 12% and employer rates from 12.8% to 13.8%.

• Potential cut in transport funding of more than 25% by 2014. This will comprise an immediate cut of £17.2 million from the specific road safety capital grant, which is used for road safety engineering measures, e.g. pedestrian crossings and installation of fixed cameras and speed humps. There will also be a £20.6 million cut in the road safety component of revenue area based grant, which is used for local authority-led local road safety partnerships.

On the brighter side of things, there were a few announcements that will have a positive effect on fleets, including:

• No change to fuel duty. The Government has committed to the staged increases announced by the previous administration, which means that there will be a 1p a litre rise in duty on 1 October and a further 0.76p a litre rise on 1 January 2011. The Chancellor also reiterated that fuel duty would increase by 1p a litre above inflation in 2011-12, 2012-13, 2013-14 and 2014-15.

However, a number of organisations have already expressed their dismay over the lack of some form of fuel duty stabiliser.

• No change to company car tax. The Government said that it intends to press ahead with the company car benefit-in-kind tax threshold changes that it inherited from the previous administration.

• A reduction in the corporation tax rate from 28% this year to 24% in 2014.

• A reduction in the small profits rate of corporation tax from 21% to 20% from 1 April 2011. This replaces the rise of 22% announced by the previous Government.

• The creation of a Green Investment Bank. This was announced by the previous administration. However, unlike his predecessor, the Chancellor has not outlined the proposals, saying that the details would not emerge until after this autumn's Spending Review.

Capital allowances for zero-carbon goods vehicles. The Chancellor has confirmed that legislation would be in the Finance Bill in the autumn for an enhanced capital allowance for zero-carbon goods vehicles. It will apply to vehicles purchased from April 2010, and will be in place for five years as announced by the previous administration in the March 2010 Budget.

Commenting on the measures introduced in today's Budget, the Chancellor said: 'Reducing the deficit is a necessary precondition for sustained economic growth; today’s plans will help to restore stability and balance to the economy, underpinning private sector confidence to support recovery.'

The author didn't add any Information to his profile yet.

Leave a comment

You must be logged in to post a comment.



Strict Standards: mktime(): You should be using the time() function instead in /var/www/vhosts/fleetworld.co.uk/httpdocs/wp-content/plugins/custom-background/includes/class.BackgroundsFrontend.php on line 347