ACFO lambasts Budget ‘attack’ on Company Car Tax
ACFO has accused the Government of making “a tax grab at the expense of the company car” following the Autumn Budget announcement of an increased diesel supplement for company cars.
The Chancellor’s announcement last week means that from April 2018, the company car tax diesel supplement will go up by one percentage point to 4% for cars not meeting the RDE2 standard – however no such cars are currently available.
In ACFO’s post-Budget webinar – the first of a new series – deputy chairman Caroline Sandall expressed the organisation’s concern that the Government is not taking a holistic approach when focusing on reducing transport emissions across the board to improve air quality.
Ms Sandall, who chaired the autumn Budget Statement-focused webinar, said she was concerned that the Chancellor was making “a tax grab at the expense of the company car” and by ignoring other vehicles was not taking a holistic approach when focusing on reducing transport emissions across the board to improve air quality.
Sandall commented: “The tax rises gloss over the fact that many employees drive a company car because they need the vehicle to do their job. The constant attack on diesel cars ignores the fact that for high-mileage drivers they are the most efficient. It will encourage fleets to consider petrol cars, but from a CO2 perspective they are not as efficient as diesel.”
Sandall has also urged fleet decision-makers to look at bringing forward diesel company car replacement cycles as soon as Real Driving Emission 2 (RDE2) models become available to enable drivers to reduce Benefit-in-Kind tax bills, while employers save on Class 1A National Insurance contributions payable on the Benefit-in-Kind bill.
Sandall added: “It is always important to keep whole-life costs under review. I believe the measure will encourage manufacturers to accelerate the introduction of RDE-qualified cars and, as they are introduced, fleet operators should analyse the viability of earlier than scheduled vehicle replacement to take advantage of the benefits they will deliver. Drivers, particularly, will be grateful.”
Commenting on the VED rise – which will see the first-year VED rate for all diesels that don’t meet RDE2 go up by one band from April 2018 – Sandall added: “It will be fairly minimal for the majority of cars, but managers should study the impact on their own fleets, particularly as the increase will impact the most on higher emissions cars. It is another trigger to encourage fleets to go down the low CO2 route.”
However, Sandall welcomed Budget clarification that there would be no Benefit-In-Kind tax charge on electricity that employers provided to charge employees’ electric vehicles and also greeted the extra funding for ultra-low emission vehicles.