2013 Budget: ACFO comments on implications for fleets
Company car tax
‘The Chancellor has bowed to lobbying by ACFO and undertaken a partial U-turn on company car benefit-in-kind tax rates on ultra low emission models.
‘In Budget 2012, the Chancellor announced that benefit-in-kind tax rates on electric company cars would leap from 0% to 13% in 2015/16. He has now announced a series of changes at the lower end of the company car benefit-in-kind tax scale including the introduction of a 5% rate on 0-50 g/km cars in 2015/16.
‘While ACFO welcomes that concession, it still means that company car drivers will go from paying no benefit-in-kind tax in 2014/15 to 5% in 2015/16 and will then see their tax bills rise further in the following years.
‘Corporate demand for electric company cars remains extremely low except in some niche operations. We believe that despite the Chancellor’s tax concession that will not change unless there are significant improvements in vehicle range and the price of electric cars significantly reduces.’
‘ACFO is pleased that the Chancellor has cancelled the 1.89p + VAT fuel duty increase scheduled for September 1. However, the move does not stop forecourt prices from rising in the future at the whim of suppliers.
‘What the Chancellor really needed to do to give business and consumers a real boost was to cut fuel duty, not simply cancel a planned future tax increase.’
‘The Chancellor has not listened to calls, particularly from the leasing industry and motor manufacturers, for changes to the capital allowance regime that is due to come into effect on April 1.
‘Therefore, at least fleet managers know exactly where they stand because there could have been some last minute changes had the Chancellor bowed to the lobbying.
‘Nevertheless, in confirming that the capital allowance and related lease rental restrictions changes will go ahead as planned, the Chancellor has also given clues as to future emission thresholds at which allowance rates will apply.
‘By announcing that the 100% full year allowance will be extended to March 31, 2018 with the emissions threshold reduced to 75 g/km from April 1, 2015 (95 g/km in 2013/14), it seems certain that the main 18% capital allowance threshold will reduce to 76 g/km from 96 g/km.
‘While we do not know what the 18% upper emissions threshold will be in the future, it is likely to reduce to perhaps 100 g/km or 110 g/km (130 g/km in 2013/14). Simultaneously we can expect the upper 8% capital allowance emissions threshold to also tighten to perhaps 101 g/km or 111 g/km from 131 g/km.
‘Additionally, it is likely that the lease rental restriction emissions threshold, which is linked to the 18% capital allowance rate (130 g/km in 2013/14), will similarly reduce.
‘ACFO is pleased that the Chancellor’s announcement seems to highlight that rates and thresholds will not change over the next two years giving a certain degree of stability.
‘However, the fact that the Chancellor has indicated his future intentions sends a clear signal to fleet managers to future-proof their company car choice lists in terms of opting for low emission vehicles or face the consequences of higher tax bills.’
Vehicle Excise Duty
‘Two measures hidden in the small print of the detailed Budget papers are likely to ease the Vehicle Excise Duty administration burden for fleet operators.
‘Following the Government’s decision to close its 39 local offices in the summer and handle the distribution of all new tax discs from its Swansea head office, fleets have been concerned that the process could cause a major logjam.
‘They fear that, as a result, new vehicles, could be delivered to end users by franchise dealers and leasing companies without the applicable tax disc.
‘However, the Government has listened and has extended the amount of time that a tax disc does not have to be displayed following the payment of tax from five working days to 14 calendar days. In addition, legislative changes will be made which will allow advanced registration year round and 14 days in advance rather than just four days.
‘While the impact in the procedural change in the issuing of tax discs from July remains to be seen, we hope that the time extension will allay fears among some fleet operators that tax discs would have to be posted to drivers after they have taken delivery of their vehicle.’